What are tokenized assets and why do they need custodians?

Tokenized assets are traditional assets (like real estate, stocks, or art) that have been converted into digital tokens on a blockchain. These tokens represent ownership or rights to the underlying asset. Custodians are specialized companies that securely store these digital tokens and the cryptographic keys needed to access them, similar to how traditional banks safeguard valuables in vaults. Without proper custody, these digital assets could be vulnerable to hacking, theft, or loss.

What is the difference between investing in cryptocurrencies directly and investing in custodian companies?

When you invest in cryptocurrencies directly, you're betting on the price of specific digital currencies like Bitcoin or Ethereum going up. However, when you invest in custodian companies, you're investing in the businesses that provide the infrastructure, security, and services that make the entire digital asset ecosystem possible. Think of it like investing in the companies that build bank vaults rather than storing your money in the vault itself. This approach can provide exposure to the growth of digital assets without the extreme volatility of individual cryptocurrencies.

What are spot cryptocurrency ETFs and why are they important for these companies?

Spot cryptocurrency ETFs (Exchange Traded Funds) are investment funds that directly hold cryptocurrencies like Bitcoin and allow investors to buy shares representing ownership in those holdings. Their recent regulatory approval in the US was a major milestone that opened the door for mainstream institutional investors to gain exposure to cryptocurrencies. This is important for custodian companies because these ETFs need secure, regulated places to store billions of dollars worth of digital assets, creating significant new business opportunities.

Why do traditional financial institutions like BNY Mellon and State Street appear in this collection?

Traditional financial giants like BNY Mellon and State Street have centuries of experience safeguarding trillions of dollars in assets. As digital assets gain mainstream acceptance, these established players are leveraging their expertise, regulatory compliance frameworks, and client relationships to expand into blockchain-based asset custody. Their entry into this space signals growing institutional legitimacy for digital assets and creates competitive advantages through their existing scale, trust, and financial resources.

16 handpicked stocks

Tokenised-Asset Custodians

These carefully selected companies are the trusted guardians of the digital economy, providing secure infrastructure for blockchain-based assets. Rather than speculating on crypto prices, this collection focuses on the essential service providers that make digital finance possible.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17