Nomura has become the first bank to offer custody services for digital assets such as bitcoin, a move that could unlock significant institutional investor interest.
The Japanese bank has partnered with Ledger, a security and infrastructure provider for cryptocurrencies, and Global Advisors, a bitcoin-specialist investment manager, through a new venture called Komainu.
The venture has been established to overcome barriers that have blocked institutional investment in digital assets by providing an infrastructure and operational framework for the wider investment manager industry.
It will also enable investors to embed or implement a consistent set of best practice standards for investing in digital assets.
“Global investment managers have long been held back from full participation in digital asset markets, limited by operational and regulatory risk,” said Jez Mohideen, global chief digital officer, wholesale, Nomura.
“Our new partnership will set the required standards that will bring peace of mind to digital asset investors and provide tools and products to enable better integration with more traditional investment vehicles such as mutual funds.”
Many institutional investors have held back from large-scale investing in cryptocurrencies, largely because of a lack of certainty around the storage and security of digital assets. Currently, only crypto exchanges have offered hot or cold storage service of digital assets, however questions have been raised around the security of this.
The venture with Nomura could ease these worries, with a bank guaranteeing asset administration and fund management services.
“Since its first digital asset trade in 2012, Global Advisors, the parent company of CoinShares, has been looking for a robust custody solution, the likes of which are readily available in the analogue financial system,” said Jean-Marie Mognetti, co-principal of Global Advisors Holdings.
“This [partnership] will open new and exciting opportunities to global participants and contribute to move digital asset closer to mainstream offerings.”
Earlier this year, global custodian State Street signalled its interest in expanding custody services for the crypto fund market, however it said at the time demand from clients was relatively small.