Wall Street Expands Into Crypto Despite High Costs and Regulatory Hurdles

Wall Street firms are expected to keep expanding into crypto, despite growing competition and minimal correlation between Bitcoin and traditional indices like the S&P 500 and Nasdaq.

A Bloomberg report highlights that managing crypto assets is significantly more complex and costly than traditional ones, with crypto custody costing up to ten times more due to heightened security demands.

Exchanges such as Bybit, OKX, and Kraken continue to lead in trading volume, while Coinbase and BitGo dominate the growing custody market, currently valued at $300 million and expanding at 30% annually.

Traditional financial giants like BNY Mellon and State Street are looking to enter the crypto custody space, though regulatory challenges, like the SEC’s SAB 121 rule, pose hurdles.

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Despite this, firms such as JPMorgan Chase are capitalizing on the market’s potential. Crypto also offers diversification opportunities, with Bitcoin’s price movements showing little correlation to traditional markets, maintaining its appeal as an independent asset.

Alexander Stefanov