The post Wall Street isn’t ready to manage crypto ETFs appeared on BitcoinEthereumNews.com.

2024 has been a year for the history books in the digital asset space.  After a decade-long dance with the SEC, the US regulator approved the first batch of spot bitcoin ETFs in January, triggering billions of dollars in institutional inflows and setting the stage for the next bull run in the broader crypto markets.  With institutional allocations expected to increase and a spot ether ETF recently approved, now’s the time to assess the preparedness of the digital asset and traditional financial industries. But current ETF issuers are not ready to grapple with multibillion-dollar inflows and the supreme complexities of managing a bearer asset tied to a cryptographic key. The underlying reasons are all related to one thing: security. Large inflows call for stronger security solutions  The flood of capital is surging at the gates, but large inflows require significantly stronger security solutions than those currently in place.  ETF issuers and other institutions investing in digital assets must prepare accordingly. In the current ETF model, the majority of spot bitcoin ETF issuers rely on Coinbase for their custody solutions and most of the trading life cycle. Coinbase is the custodian for eight bitcoin ETF issuers in the US, including BlackRock’s (BLK) iShares Bitcoin Trust (IBIT), Bitwise Bitcoin ETF (BITB), the ARK 21Shares Bitcoin ETF (ARKB), and Grayscale (GBTC). While there are a couple other custodians in the mix, including BitGo, Gemini, and Fidelity’s self custody, this overreliance on one custodian raises concerns about centralization and counterparty risk. Read more from our opinion section: Spot ETH ETFs without staking miss the mark EY-Parthenon research suggests institutional allocations to digital assets and digital asset-related products are expected to increase, with this class of investors particularly focused on tokenizing real-world assets (RWAs). In a survey of over 250 institutions, 60% already allocate more…

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Filed under: News - @ June 22, 2024 2:28 pm