THERE’S AN ARMS race afoot over who can store cryptocurrency safest. Perhaps you’d like your bitcoin buried in a vault under a mountain in the Swiss Alps? Xapo has offered that as a service to wealthy investors, for free. Coinbase, best known for its popular cryptocurrency exchange, prefers elaborate key-printing rituals along with a Faraday cage. Anchorage, an Andreessen Horowitz-backed startup, promises easy-access digital storage with some cryptographic voodoo. And now old-school firms like Fidelity and Bakkt, which shares an owner with the New York Stock Exchange, are jumping into the fray with storage solutions of their own.

The aim behind all these sophisticated security arrangements: wooing Wall Street.

A key property of crypto is that it’s proven a pretty dang easy target for thieves. Whether it’s North Korea hammering crypto businesses around the world or an exchange founder absconding with cash, vulnerabilities are abundant. For the crypto industry, that’s not a good look, especially when it comes to institutional investors—pensions and hedge funds and university endowments—for whom there are major consequences when breaches occur. For them, it’s not just a good idea to nail down the furniture, it’s the law.

This week, the still-fringe world of crypto custody saw a spike in activity. Late Thursday, Coinbase’s custody arm purchased the institutional business of rival Xapo for a reported $55 million. The deal wasn’t a surprise, following reports this spring that Coinbase had outbid Fidelity Digital Assets, which started offering custody to clients in March. Then on Friday, Bakkt announced that it had received approval to offer bitcoin futures in September, following months of regulatory delays.

So is crypto the next big thing in institutional investment, or is this fighting over scraps? For now, crypto custody still involves a relatively small pool of money. Coinbase got a boost earlier this month when Grayscale Investments moved its $2.7 billion worth of crypto funds from Xapo to Coinbase, more than doubling the company’s assets under custody. That’s tiny compared with the trillions under management for a company like Fidelity. Custody competitors like Palo Alto, California-based BitGo have reportedly been circling for Xapo’s other clients.

Still, companies like Coinbase and Fidelity think there’s room for growth. In May, Fidelity released a survey of more than 400 institutional investors that found 22 percent already held cryptocurrency, and another quarter saw potential to do so.

Sourced through Scoop.it from: www.wired.com