- New Report from BCG Reveals Custody Decisions Are Increasingly Shaping Financial Institutions' Ability to Offer Digital Asset Services
- More than 30% of Digital Assets, Excluding Holdings on Centralized Exchanges, Are Held Through Institutional Custody Models
- Governance, Integration with Core Banking Systems, and the Ability to Operate Across Multiple Custodians Are Becoming Critical Considerations
BOSTON—Digital asset custody is moving beyond its traditional role of safeguarding assets to become a core operating capability for financial institutions, according to a new report from Boston Consulting Group (BCG), commissioned by Ripple. As banks expand into tokenized assets, stablecoins, and blockchain-based payments, custody infrastructure is increasingly determining how institutions manage risk, integrate new services, and capture potential revenue opportunities.
The report, Beyond Safekeeping: Custody as the Operating Layer Beneath Digital Finance, examines the changing digital asset custody market, including institutional adoption, operating models, technology requirements, and financial implications. It finds that security and key management remain essential, but are no longer sufficient to differentiate custody providers. Governance, connectivity, regulatory compliance, and integration with existing financial systems are becoming increasingly important.
“Digital asset custody is no longer simply about protecting assets. It is turning into the layer that every other digital finance service runs on and becoming a strategic capability that determines how financial institutions participate in digital finance,” said Tibor Merey, a managing director and partner at BCG and coauthor of the report. “Banks need to think beyond safekeeping and consider how their custody infrastructure can support new products, improve operational efficiency, and create additional sources of revenue.”
Digital Asset Custody Is Becoming a Strategic Business Decision
More than 30% of digital assets, excluding holdings on centralized exchanges, are now held through institutional custody models, including qualified custodians, enterprise self-custody, and wallet-as-a-service. As adoption expands, financial institutions face increasingly consequential decisions about which custody capabilities to operate internally and which to obtain from external providers.
The report identifies four distinct custody models: enterprise self-custody technology, wallet-as-a-service, managed custody, and non-custodial wallets. Each has different implications for operating costs, control, liability, and revenue generation.
Rather than selecting a single model for all activities, institutions may benefit from combining approaches according to their business requirements. Banks, for example, may use managed custody for certain investment products while operating their own infrastructure for treasury or payments activities.
Digital Asset Services Could Generate up to $100 Million in P&L Upside for Regional Banks
The financial implications extend beyond the cost of safeguarding digital assets. BCG's illustrative analysis finds that a regional bank with $200 billion to $300 billion in assets could generate $80 million to $100 million in P&L upside by combining appropriate custody decisions with five digital asset use cases.
Governance and Integration Are Reshaping Custody Requirements
As digital asset activity increases, financial institutions must manage security risks that extend beyond cryptographic key protection.
More than $3.4 billion in digital assets was stolen in 2025. BCG's examination of three security incidents spanning 2024 to 2026 suggests that weaknesses in transaction approval and verification processes can expose institutions to substantial losses even when underlying cryptographic systems remain intact.
The report highlights the importance of controls governing who can initiate transactions, who must approve them, and how transactions are independently verified.
Financial institutions are also increasingly using multiple custody providers to address operational resilience, regulatory requirements, and differences in asset or network coverage. This creates demand for orchestration capabilities that allow institutions to apply consistent policies and reporting across providers.
The Custody Market Faces Consolidation and New Technology Challenges
BCG expects increasing standardization of basic safekeeping services to contribute to consolidation among custody providers. The report identifies three emerging approaches to differentiation: integrating multiple digital asset services, connecting institutions through shared networks, and embedding custody technology directly into existing banking systems.
Looking further ahead, quantum computing and AI-initiated payments could introduce additional requirements for custody infrastructure.
The report notes that approximately 30% of Bitcoin supply is held at addresses with publicly visible keys, creating potential exposure if sufficiently capable quantum computers emerge. It also identifies unresolved questions about liability for payments initiated by AI agents acting under delegated authority.
For financial institutions, the report recommends selecting custody models based on intended business activities, assessing providers against governance and integration requirements, and preserving the flexibility to adapt as technology and regulation evolve.
“The institutions that benefit most from digital assets will be those that make custody decisions based on their broader business strategy, rather than treating custody as an isolated technology purchase,” said Bernhard Kronfellner, a partner and associate director at BCG and coauthor of the report. “As the market evolves, flexibility will be essential. Banks need infrastructure that can accommodate different custody models, integrate with existing systems, and adapt to changing regulatory and operational requirements.”
Media Contact:
Eric Gregoire
gregoire.eric@bcg.com
