Insured Cryptocurrency Custody Services and Their Potential Impact: The Key to Institutional Investment Growth?

Leading United States crypto exchange and wallet provider Coinbase launched its custody services for institutional investors in July 2018.

Crypto hardware wallet producer Ledger partnered with a Hong Kong trust company, Legacy Trust, to offer insured cryptocurrency custody services.

Insured cryptocurrency custody services, much like traditional investment custody services, are third-party providers of storage and security facilities with the main purpose of safeguarding investor assets.

These services are aimed specifically at institutional investors - such as hedge funds and other investment funds - and hold the digital assets on behalf of the investor in secure storage locations.

The second reason why institutional investors need custody services is to comply with regulation.

Traditional cryptocurrency exchanges and wallets do not necessarily meet these criteria and are not viable options for institutional investors to trade and store customer funds on.

What is the potential market impact if institutional investors can be lured in?Whether or not mainstream institutional investment will embrace the cryptocurrency market has long been a debate.

Analysts and cryptocurrency commentators agree that a lack of regulated custody services is one of the main reasons institutional investors are still reluctant to enter the market.

In February, pensions and endowment consultancy, Cambridge Associates, said that cryptocurrency represents a sound investment for institutional investors, according to a Bloomberg report.

"Despite the challenges, we believe that it is worthwhile for investors to begin exploring this area today with an eye toward the long term.''.Although it would be impossible to predict the exact impact of an institutional influx into crypto, the overall consensus seems to be that a boost of capital into the market will bring a significant increase in prices, but with greater stability.Blockchain and crypto-focused crowdfunding startup MediaShares's CEO, Gene Massey, said in an interview:."Blackrock, Vanguard, State Street, and BNY Mellon are recognized as the largest institutional investors and if they adopt Blockchain and Cryptocurrencies, you will see massive new investments from retail.