2024 Custody Outlook

2024 is already proving to be a pivotal year, characterised by bullish price predictions, the approval of spot Bitcoin ETFs in the US, and discussions surrounding the impending Bitcoin halving. Now, the significance of secure, regulated and trusted custody for digital assets cannot be overstated. Custody will be more important than ever to enable the next stage of growth of the digital asset industry. 

We would like to share our insights on the evolving digital asset custody market, Komainu's strategic positioning, and our expectations for the upcoming year. 

Custodial Networks - Collaborations Redefining Security
Post FTX, the market demanded the segregation of services and solutions to better mitigate counterparty risk. Custodians needed to innovate. Secure custody shouldn’t hinder the utility of assets. Now, significant players in the digital asset ecosystem are collaborating to enhance efficiency, security, and ecosystem maturity. 

In 2023, we launched Komainu Connect to help mitigate counterparty risk, removing the need for clients to store collateral with trading counterparties, to create a solution that, via partners, facilitates 24/7 trading with assets held in custody. This allows clients to maximize investment opportunities whilst keeping their assets separate and secure. Our first Komainu Connect partner was OKX, then Hidden Road, Gate.io and many others following this year. 

This level of industry collaboration is essential, and 2024 will see the start of another partnership – Komainu Connect and Copper’s ClearLoop. Together with Copper, we are looking to launch multi-custodian off-exchange settlement, allowing clients to benefit from both regulated, on-chain custody provided by Komainu, and access to off-exchange settlement and rapid settlement times of up to T+4 hours through Copper’s ClearLoop.   

Custodians sit at the heart of the market, so connectivity and collaboration will remain key. We are dedicated to advancing custodial networks in 2024 and beyond, working together to address the evolving needs of the institutional ecosystem. 

Regulatory Harmonization - Setting a Global Standard 
The outlines of regulatory clarity are emerging in many different parts of the world, with traditional regulators like the UK’s FCA creating frameworks for digital asset firms, as well as dedicated digital asset regulators, like VARA in Dubai, setting new regulatory benchmarks. But digital assets are global, and like traditional asset classes, we need solutions that work across jurisdictions, with recognition across borders. At Komainu, we are committed to adhering to the highest standards of compliance and customer protection and continue to expand our regulatory footprint. In 2023, we also joined the UK Cryptoasset Business Council (UKCBC), actively participating in educating policymakers, promoting collaboration, and advocating for clear regulation.  

As we look to 2024, our regulatory wish list remains consistent – global clarity around definitions, disclosures, and cross-border regulatory coordination. The industry, along with governments and regulatory bodies, must find a clear path forward. 

Institutional Adoption – The Market is Ready 
Over the past few years, we have seen a steady increase in institutional participation in digital assets, drawing well known traditional financial institutions, hedge funds, and family offices into the space. In 2024, we expect this to accelerate further, with institutions looking to expand their involvement in digital assets and blockchain technology. There is also much anticipation surrounding the long term impact of spot Bitcoin ETF approvals in the US, with major players like BlackRock entering the space. Many believe this is the inflection point for crypto. 

As significant institutional capital flows into the ecosystem, custody becomes even more critical. Institutions need secure, efficient, and trusted market infrastructure, ensuring asset security and minimising counterparty risk. Since our launch in 2018, Komainu has been the trusted institutional partner for digital asset custody services, and we have continued to grow and innovate to meet the needs of this burgeoning market. Over the past year, we have expanded our services, introduced Komainu Connect, enhanced staking services, and entered new regulatory regions, building a comprehensive set of custodial services tailored to institutional needs. 

Digital assets have firmly established their presence, the market infrastructure is stronger, and we are ready to navigate 2024 – a year that will be marked by institutional participation, improved regulatory clarity, and a stronger ecosystem. Komainu is committed to leading the way, providing clients with secure, compliant, and innovative custodial solutions for 2024 and beyond.