Cold storage, hot competition: inside the digital asset custody revolution

The global market for custody of securities is vast; as reported by Flow.db: “PwC projects global assets under management will reach US$171trn by 2028.” But, in the late 19th and early 20th centuries, custody of securities had evolved from banks offering custody for shares, initially providing physical safekeeping of paper certificates in their vaults. The modern concept of global custody services - where banks also handle settlement, administration and cross-border asset servicing - emerged in the 1970s, notably after the founding of both the Depository Trust Company (DTC) in 1973 and the passage of the US Employee Retirement Income Security Act (ERISA) in 1974 in order to address the paperwork crisis in securities markets. Furthermore, the use of custodians increased in the 1980s as markets became more global. This included innovations such as the introduction of Certificateless Registry for Electronic Share Transfer (CREST) as a project sponsored by the Bank of England in 1993 and …