Bitcoin and other cryptocurrencies have become more prominent over time. Since cryptocurrencies have become more popular, they are also receiving more scrutiny. Regulators are working to limit the use of cryptocurrencies all around the world.
Despite the fact that cryptocurrency is becoming more and more popular among people, different organizations have varied views on it. It has been discovered that BTC might be in competition with some conventional banking institutions because of its incomparable market value.
Ki Young Ju, the CEO of CryptoQuant, has asserted that the market capitalization of leading custodian banks may soon be challenged by Bitcoin (BTC). He said in a tweet that seven of the top nine custodian institutions have entered the cryptocurrency custody industry only in 2022, despite Bitcoin’s market cap being barely 0.25% of that of the top nine banks.
He continued by saying that tokenization is expected to be the next step taken by these custodian banks, which collectively hold $148 trillion in assets under custody or administration (AUC/AUA).
Ju claims that it is still unclear if they would do tokenization utilizing Layer 1 (L1) blockchains already in place or merely by employing distributed ledger technology. But the market valuation of whatever L1 they choose would soar; in the case of Ethereum, ETH could theoretically increase by 940x to almost $1.2 million.
His statement follows a Wall Street Journal report stating that BNY Mellon, the biggest and one of the oldest custodian banks, has started offering Bitcoin custody services after receiving New York state approval.
Institutions increase Bitcoin adoption
Not all traditional financial institutions have entered the Bitcoin and cryptocurrency industry, including custodian banks. Additionally, the sector has welcomed a number of asset managers. Asset management giant BlackRock began providing cryptocurrency investment services to its clients in August thanks to a collaboration with Coinbase Prime.
According to sources, J.P. Morgan permits its financial advisors to purchase and sell Bitcoin on behalf of its clients even though the company has not yet started providing custody services. Institutions engaged in trade finance have regularly observed a rise in customer demand for cryptocurrency services.