ChainCatcher reported that according to Bloomberg, so far, crypto-native companies such as Coinbase Global Inc. and BitGo Inc. have been the dominant service providers, while traditional financial companies are mostly in holding mode due to concerns about regulatory uncertainty surrounding digital assets.

While the current custody market is only around $300 million, the business remains attractive, with companies such as Fireblocks Inc. estimating that the industry is growing at about 30% annually.

Leading custodians BNY Mellon, State Street Corp. and Citigroup Inc. have either made initial forays into cryptocurrency custody or expressed interest. Despite setbacks, the companies are still experimenting, with many plans centered around safeguarding tokenized assets.

For example, JPMorgan Chase & Co. operates a project called Onyx that allows blockchain payments between bank clients. In December, the Depository Trust & Clearing Corporation acquired Securrency to provide products for tokenizing traditional financial assets. In August, State Street selected vendor Taurus for tokenization and custody of digital asset services.

A major issue holding back established financial institutions is a U.S. SEC rule, SAB 121, that makes it impossible for highly regulated financial firms to provide cryptocurrency custody services. President Biden vetoed an effort by Congress to overturn the law. Several banks were exempted.