The Cryptocurrency Custody Industry Will Be the Most Important Aspect in a Year – Tiger Research

Key Takeaways

• The digital asset custody market has rapidly grown over the past year, with the number of European MiCA custody license holders increasing from 50 to 230, more than quadrupling.
• Custody has limitations on growth as it charges storage fees proportional to the value of the assets held, and trusts that can manage and operate the assets are emerging as the next step.
• Similar to how vault companies and State Street expanded into inheritance and collateral management based on the assets they were holding 150 years ago, the same cycle is repeating in digital assets.
• Anchorage and BitGo are expanding their businesses based on stablecoin issuance and settlement, while Agora and Catena are pursuing business expansions based on investment advisory and management.
• In the future, the competitiveness of custodians is expected to depend on what business they layer on top of the assets held rather than just the scale of custody.

1. The Rapid Growth of the Custody Industry in One Year

A year ago, Tiger Research emphasized in its report "The Growth of the Custody Industry You Overlooked" that custody is the core foundation of the digital asset industry. However, at that time, custody services for storing and managing assets did not receive much attention.

Over the past year, the number of companies entering the virtual asset custody market has surged. In fact, in Europe, the number of custody providers licensed under MiCA (the European regulation on virtual assets) has increased from 50 to over 230. Additionally, global financial institutions such as Standard Chartered acquiring specialized firms and Citigroup announcing its entry this year have followed suit.

This change is due to the steady increase in on-chain assets. According to RWA.xyz, tokenized real-world assets (RWA) have increased by 85% this year alone, reaching approximately $39.8 billion. Stablecoins are also expected to grow by over 50% in 2025, surpassing $300 billion and maintaining a solid level thereafter. Since both tokenized assets and stablecoins require the custody of real-world assets, the demand for custody has naturally expanded as the asset scale increases.

However, companies are not simply entering the market with the goal of providing storage services. The custody business primarily generates revenue from storage fees proportional to the deposited assets, which limits growth. Therefore, companies are adopting strategies to maximize profitability by expanding into trust businesses based on the customer assets secured through custody.

Ultimately, the reason companies are focusing on the custody market is to absorb the increased demand for asset custody in the short term and to use it as a stepping stone to expand into high-value businesses like trusts in the long term.

2. Custody vs. Trust: Does It End with Storage Fees or Layering Business on Top?

Custody and trust are often confused due to their similar names. Moreover, in trusts, the party that holds the property is called the 'trustee,' which adds to the confusion. The commonality between the two businesses is that they both involve holding customer assets, but what can be done after the assets are entrusted differs.

Custody is a service that holds the customer's assets on their behalf. The owner of the assets remains the customer, and the custodian's role is solely to store the assets. However, in a trust, when the customer (the trustor) hands over the assets to the trust company (the trustee), the trust company manages, operates, and disposes of those assets according to the purpose.

The profits generated here go to the person designated by the customer (the beneficiary). It is akin to a steward managing family assets and distributing them to family members at a specified time. Since the trust company directly judges and acts on the entrusted assets, it has a legal obligation to prioritize the interests of the beneficiaries.

In the end, while both businesses involve holding customer assets, the difference lies in whether they focus on 'storage' or 'management and operation' afterward.

3. Repeating Past Cycles: From Custody to Trust

Until now, most digital asset custody services have focused solely on the role of securely storing assets. In the early market, the demand for custody was centered around spot and futures trading, so complex operational structures were not necessary. However, with the recent introduction of financial products based on real-world assets (RWA), the need for trust functions that can perform operational instructions and manage complex investment structures is rapidly emerging.

This change is very similar to the development process of the traditional financial industry in the past. During the 1860s, the expansion of government bond issuance during the American Civil War led to a surge in demand for the safe custody of debt securities, and subsequently, the emergence of fund-based collective investment structures expanded and developed custody work into a specialized trust industry.

3.1. Vault Companies: From Custody to Inheritance and Collateral Management

A representative example of a company that started with custody and expanded into trust is the vault companies in Boston and Rochester. The initial business of these two companies was renting out safes to customers and charging rent. Later, they expanded their business by taking on trust work, managing personal inheritance assets, and managing corporate bond collateral.

The ability to expand their business was due to the fact that simply providing asset custody did not solve the problems faced by customers. The vault companies gained the authority to perform trust work, allowing them to solve the issues faced by individuals and corporations.

For individual customers, inheritance was a problem. When a customer died, they had to organize the securities in the safe and distribute them to the heirs, but a company that only rented out safes had no authority to handle this. By taking on trust work, the vault companies could now be responsible for managing and distributing the estate after death. They could arrange for lifetime income to be paid to a spouse and, upon the spouse's death, transfer the principal to the children.

For corporate customers, managing bond collateral was an issue. When bonds were issued to multiple investors, there was a need for a party to manage the collateral on behalf of the bondholders and to exercise rights in the event of default. This task, which was difficult for bondholders to handle individually, was taken on by the trust company. The Boston company became the custodian managing the collateral for the $3 million bond issuance of American Rapid Telegraph in 1883 and later claimed the execution of collateral rights on behalf of the bondholders when interest payments were not made.

Looking at past examples, vault companies grew by adding legal authority to a trusted custody system, taking on tasks that customers could not solve directly.

The trust that assets could be safely entrusted became the foundation necessary for entrusting management, and the trust authority provided the basis for involvement in inheritance and collateral management. They utilized the capabilities built through custody to solve the next problems of their customers. The growth opportunities for custodians also lie here. It is essential to observe not only how much the entrusted assets have increased but also what additional needs the customers holding those assets have.

3.2. State Street: From Custody of Fund Assets to Direct Management

State Street is an example of a company that transitioned from holding fund assets to direct management. It took on the role of the first mutual fund custodian in the U.S. in 1924 and established an investment management department for institutional investors in 1978. A bank that previously held assets managed by other investment firms entered the business of receiving management fees directly.

When custody and management are handled together, the services that can be provided to customers increase. Customers can resolve both the entrusting of assets and the management of those assets within the same group. The company can propose management products to customers who were using custody services. This allows for growth not only by finding new customers but also by providing more services to existing customers.

State Street began its operational business in areas closely related to its existing work. Initially, it focused on index management and cash management. In particular, index management required the ability to buy assets according to indices, process transactions, and manage holdings. The work it had been doing as a custodian bank could be utilized in its operational business.

Subsequently, it expanded its customer base for selling products. In 1993, it launched SPY, the first ETF in the U.S., in collaboration with the American Stock Exchange. This transformed the index management services it provided to institutions into products that individuals could easily buy and sell on exchanges. The business evolved from custody to operations and then to product sales.

State Street leveraged its experience in trading, settlement, and record-keeping of fund assets for index management and subsequently expanded its customer base to include individual investors with the introduction of ETFs.

Digital asset custodians can also find new business opportunities from the assets they manage and existing customers. They need to observe what customers want beyond custody and add services they can excel at. It is as important to create ways for customers to utilize their assets as it is to increase the amount of assets under custody.

4. How Digital Asset Custodians are Transitioning to Trust Services

Digital asset custodians are moving beyond simple custody to actively expand into trust services. They are obtaining or applying for trust licenses and diversifying their service and product offerings for customers.

Notable companies in this space include Anchorage, BitGo, Agora, and Catena. Anchorage and BitGo are expanding their businesses through stablecoin issuance and settlement, while Agora and Catena are preparing for investment advisory and management services. Although their business directions differ, they are all seeking new revenue sources from the assets they have been holding.

4.1. Anchorage and BitGo: Adding Banking Services on Top of Custodied Assets

In the past, vault companies expanded their businesses by managing the inheritance and collateral of the assets they held. In the digital asset space, Anchorage Digital and BitGo are similarly broadening their operations. Both companies started by custodizing institutional digital assets and are now providing the financial services necessary for managing the assets entrusted to them by customers.

Both companies have established environments to conduct not only custodial but also trust business. Anchorage became a state-chartered trust company in January 2021, while BitGo transitioned to a national trust bank supervised by the Office of the Comptroller of the Currency (OCC) in December 2025.

Since then, their business scope has expanded to include institutional products for Bitcoin and Ethereum, as well as RWA and stablecoins. They are adding trading, settlement, collateral lending, and staking to asset custody through trust banks and affiliates. Furthermore, they are directly responsible for issuance, redemption, and reserve management as issuers of stablecoins.

Now, the competition for these two companies is not limited to other custodians. They can also compete with traditional banks entering the digital asset business for institutional clients. This is because they already have established customers and experience in processing digital asset transactions. As the markets for Bitcoin and Ethereum institutional products, RWA, and stablecoins grow, the opportunities for these two companies to capture a portion of the financial services traditionally handled by banks also increase.

These two companies have now grown large enough to compete with traditional banks for customers in the digital asset sector.

Their established institutional clients and experience in handling digital asset financial operations give them a competitive edge. While traditional banks expand into the digital asset business, these two companies can secure their positions by managing existing customer transactions, settlements, and financing. By the time banks enter this market, these two companies may already be established as major competitors.

As the markets for Bitcoin and Ethereum institutional products, RWA, and stablecoins grow, the financial operations they can capture also increase. Just as vault companies grew into banks through trust services, these two companies are also evolving from custodial specialists to companies managing institutional digital asset finances.

In the future, those who expand their businesses through custody and trust may grow into global banks. If digital assets can be entrusted and necessary financial operations can be handled conveniently anywhere in the world, we may be able to use them like banks operated by the state.

4.2. Agora and Catena: Directly Managing Custodied Assets

State Street utilized its experience in managing fund assets for operations and subsequently expanded its customer base with ETFs. Agora and Catena are also preparing to add investment advisory and management services to their custody offerings. They aim to go beyond simply holding customer assets to suggesting where and how to manage them.

Both companies received preliminary conditional approval from the OCC to establish a national trust bank on September 18, 2026. However, they must meet conditions such as capital and operational systems to start their business. Therefore, the advisory and management services through the trust bank are still in the preparatory stage and not yet at a point to evaluate revenue or performance.

After receiving approval, Agora plans to recommend investment opportunities and yield opportunities to institutional clients who have entrusted their assets. The final investment decisions will be made by the clients. Catena plans to manage assets directly according to conditions set with clients and also manage assets used by AI agents on behalf of companies. Although their methods differ, both companies aim to add investment advisory or management to asset custody.

Their proactive movements in the early stages of the industry provide a strong competitive advantage in understanding the market and building strategies in the digital asset management space.

In DeFi, lending assets or providing liquidity and connecting various services to generate revenue has a structure different from traditional finance, making it time-consuming to learn where revenue comes from and what risks need to be taken. This is why, even with extensive operational experience in traditional finance, it is challenging to enter this market directly.

If Agora and Catena analyze investment opportunities and prepare management strategies first, they may have an advantage over financial companies entering the market later. Once they start operations and accumulate actual performance and risk management experience, this gap may widen further.

If these two companies gain digital asset management experience before traditional financial companies, they can secure a significant advantage in the market based on that experience. If they then launch products that individual investors can easily use, they could grow large enough to compete on equal footing with traditional financial managers.

5. Custody is Now Basic; Next Steps Must Be Prepared

Safely storing digital assets is the basic duty of custodians. Moving forward, it will be important to provide services to customers based on the assets entrusted to them. As the DeFi and RWA markets grow, the demand for not only custody but also investment, collateral use, and trading is increasing.

Tokenized government bond funds are one example. Investors can not only earn returns by holding the fund but can also use it as collateral to borrow stablecoins for other investments. One asset can be used in multiple financial transactions. From a financial institution's perspective, it is becoming increasingly important to create new products and help existing products be utilized more diversely by customers.

Custodians also have opportunities to expand their businesses. For institutions to utilize digital assets for investment and trading, safe custody, as well as asset transfer, settlement, and collateral management are necessary. If custodians already holding assets can handle these tasks, they can take on a larger role in the financial transactions of institutional clients.

Trust is a method that involves managing and operating assets. It can take responsibility for managing assets according to the purposes and contracts set by clients, including investing or disbursing funds. By expanding services through trust banks and affiliates, as seen in the companies mentioned earlier, there is potential to grow into a company that provides some of the services traditionally offered by banks, securities firms, and asset managers.

However, simply obtaining approval does not lead to business growth. It is essential to create services that meet customer needs, manage assets securely, and build trust through actual performance. Custodians with prior experience in digital asset management and trading can gain an edge in competition with traditional financial institutions.

A year ago, the focus was on the growth of the custody industry itself. Now, we need to observe what companies entrusted with those assets can do next. The coming year could be a time for companies preparing for trust operations to launch actual services and secure customers. If custody is a basic requirement, the next competitive factor will be how to grow a business through trust.