Custodians Could Sweep Up Following FTX Collapse: Strategist
There is a bright spot for institutional crypto custodian players following the collapse of FTX, according to Octavio Marenzi, CEO of management consultancy firm Opimas.
“The real beneficiaries are going to be people who have very big names and very large balance sheets,” Marenzi said during an appearance on CoinDesk TV’s “First Mover” program on Thursday. “People like Fidelity and BNY Mellon.”
In 2018, Fidelity launched its trading platform, Fidelity Digital Assets, which focuses on crypto-based institutional custody and most recently opened its waiting list for Fidelity Crypto, a crypto-native retail trading product. Meanwhile, the New York-based BNY Mellon threw its hat into the ring, offering crypto custody services last month.
Marenzi said that smaller crypto-native custody services players like Coinbase (COIN), on the other hand, may fall short of gaining institutional interest.
“Someone like Coinbase is simply not large enough to gain the faith and trust of very large asset managers and traders who are looking to be active in the space,” Marenzi said, adding that institutional investors, worried about whether their funds are securely stowed away, could be “scared away” for some time, even months.
“They’re going to be very careful about the contracts they sign and what they feel their custodian or the person holding their bitcoin is doing with it,” Marenzi said in reference to the way FTX was operating.
For the majority of investors, including long and short term asset managers, being an investor in a fund that has “extreme leverage,” may not be that “exciting” in the long term, according to Marenzi.
“[Investors] are going to want to know exactly what happens to my assets when you're holding on to them. Do you lend them out? Are you fully reserved, are you not fully reserved?,” Marenzi said.