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investment decisions, and make sure that enforcement resources are deployed judiciously. By any means, the scope of the project is enormous, and the journey has really only just begun. The consultation phase has commenced, but for fullscale establishment and enactment of a digital assets infrastructure, we’ re probably looking at years – a fact that isn’ t of particular concern to DTCC’ s Chakar:“ This is a process of incremental progress,” she says.“ It took centuries to build the financial infrastructure we have today. If adequate regulation of digital asset infrastructures takes a few more years to develop, so be it – it will positively transform financial infrastructure for generations to come, so it’ s important to get right.”
The next steps So, the regulatory cogs are starting to turn and custodians are gearing up. Their focus is twofold: the custody of crypto assets, and the tokenisation of real assets.“ Our clients are keen to allocate their portfolios to digital assets, and tap into the opportunity, both from the perspective of access to a new asset class, as well as expanded distribution and operational efficiencies,” says Milrod. With the rescission of SAB 121 and the new guidance from the OCC, the traditional asset servicers will be eyeing a more substantive role in the cryptocustody market – particularly in the booming crypto ETF market, where they’ ll be eager to reclaim lost ground from the first wave of approvals. As the SEC considers expanding ETF options to other asset classes, expect custodians to be well positioned to seize those opportunities. With traditional providers entering the space, it could also spell for wider adoption of digital asset strategies among investors. The demand is there – you just need to look at the figures for the bitcoin ETFs – but there is still some understandable hesitancy around exposure to the asset class. Crypto has historically been highly volatile compared to traditional assets, while concerns around hacks, private key management and operational risk continue to be a consideration for investors. Traditional custodians entering the space could help to alleviate some of those fears.
“ There is a lot of positive momentum in the market especially given the promise of proposed legislation to provide much needed clarity.”
BNY SPOKESPERSON
If crypto custody is the short-term opportunity, tokenisation is the longterm play. The technology has long been touted as the future of finance, promising to transform how assets are issued, traded and custodied. While progress has been steady to date, momentum is now clearly behind the tokenisation. Among other things, the collateral management sector looks set to be transformed, advances are being made in real-time FX settlement, while BlackRock recently launched its first tokenised fund.“ We continue to work closely with our clients to meet their evolving needs around tokenisation and custody,” says the BNY spokesperson.“ We are also
32 Global Custodian Spring 2025