Digital asset custody reshapes how banks compete in tokenized finance

Digital asset custody has crossed a threshold. What was once a technical afterthought – the secure storage of private cryptographic keys – is now a strategic capability that determines how banks and financial institutions position themselves across a rapidly changing landscape, according to a report from Boston Consulting Group (BCG),

The report, Beyond Safekeeping: Custody as the Operating Layer Beneath Digital Finance, was commissioned by digital infrastructure company Ripple and finds that more than 30% of digital assets held outside centralized exchanges are now under institutional custody models. As banks expand into tokenized assets, stablecoins, and blockchain-based payments, the custody infrastructure an institution selects is increasingly the variable that separates those able to compete in digital finance from those that cannot.

"Digital asset custody is no longer simply about protecting assets. It is turning into the layer that every other digital finance service runs on," said Tibor Merey, a managing director and partner at BCG and co-author 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."

For financial advisors and wealth managers, the shift has direct implications. As advisor allocations to crypto reached an all-time high in the 2026 Bitwise/VettaFi benchmark survey, demand pressure is building on the institutions behind the platforms advisors use. Custody decisions made at the bank or custodian level now flow directly into what services advisors can offer clients.

Security has become the floor, not the ceiling

The report highlights a shift in what institutions actually evaluate when selecting custody providers. Under frameworks such as MiCA in Europe and the GENIUS Act in the United States, cryptographic security and private-key management have effectively become table stakes – the minimum required to operate, not a basis for competitive differentiation.

Institutions are now evaluating providers on what sits above that security baseline: enterprise-grade governance and policy controls, interoperability across networks, and integration with existing financial infrastructure. The report also flags a newer dimension to the security conversation: rising bot and AI-driven activity is making transaction approval and verification governance just as important as the cryptography underlying the system.

That point is underscored by the theft figures. More than $3.4 billion in digital assets was stolen in 2025, according to BCG, and the report's review of three security incidents spanning 2024 to 2026 suggests that losses often resulted from weaknesses in governance and approval processes rather than failures in underlying cryptographic systems.

Four models, one strategic choice

The BCG report identifies four distinct custody models currently in use: enterprise self-custody technology, wallet-as-a-service, managed custody, and non-custodial wallets. Each carries different implications for operating costs, control, liability, and revenue potential.

Wallet-as-a-Service is gaining traction among retail- and payments-focused fintechs, while larger banks are increasingly licensing self-custody technology and building client products directly on top of it. A third model is the integrated, or "one-stop shop," approach – where custody, settlement assets, payment rails, treasury, and execution are bundled under a single provider, reducing the need for separate integrations across each function.

Rather than locking into a single model, the report recommends that institutions consider combining approaches based on their specific business activities. BCG finds that combining multiple custodians behind a common orchestration layer is becoming a market standard, with interoperability and consistent policy controls across providers emerging as critical selection criteria.

From cost center to revenue engine

The financial case for getting custody strategy right is the report's sharpest argument for executive attention. BCG values the total addressable custody market at approximately $1.4 trillion to $1.6 trillion as of July 2026, according to reporting on the report's findings, encompassing exchange balances, self-custody, wallet-as-a-service, and managed custody.

The revenue opportunity extends well beyond safekeeping fees. Custody underpins services such as tokenization, stablecoin issuance, payments, treasury, lending and collateral management – shifting the business case from cost and risk management toward active financial value creation.

BCG's illustrative analysis finds that a regional bank with $200 billion to $300 billion in assets could generate approximately $80 million to $100 million in profit-and-loss upside by pairing sound custody decisions with five digital asset use cases.

Advisors navigate a changing infrastructure landscape

The BCG findings land at a moment when the advisor community is deepening its engagement with digital assets, even as institutional infrastructure works to keep pace. The 2026 Bitwise/VettaFi survey found that 32% of advisors allocated to crypto in client accounts last year, up from 22% in 2024, with 99% of those allocators planning to maintain or increase exposure.

Stablecoins and tokenization attracted 30% advisor interest as emerging themes, suggesting that the custody infrastructure conversation will increasingly reach advisors' desks rather than staying confined to institutional operations teams.

InvestmentNews has tracked the growing advisor engagement with digital asset strategies including the regulatory developments – from the SEC's Bitcoin ETF approvals to the GENIUS Act's stablecoin framework – that are redefining what advisors can custody and recommend on behalf of clients.

Consolidation and longer-range risks

BCG expects custody providers that offer only basic safekeeping to face increasing pressure as standardization compresses margins. The report identifies three provider archetypes emerging to capture the next stage of the market: vertically integrated platforms that bundle custody with stablecoins, payments, and treasury; network aggregators that connect institutions across shared infrastructure; and modular providers that embed custody technology directly into banks' existing core systems.

Two longer-range risks add urgency to institutional planning. Approximately 30% of Bitcoin supply is held at addresses with publicly visible keys, according to BCG, creating potential exposure if sufficiently capable quantum computers emerge. The report also raises unresolved questions around liability for payments initiated by AI agents acting under delegated authority – an issue that carries direct consequences for how institutions structure digital asset governance going forward.

"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 co-author of the report. "Banks need infrastructure that can accommodate different custody models, integrate with existing systems, and adapt to changing regulatory and operational requirements."

For advisors, the practical question is how quickly these institutional shifts translate into better-integrated, more transparent services. As custody moves from the operations department to the boardroom, wealth managers best positioned to serve digital asset clients will be those who understand the infrastructure layer their offerings are built on.

The full BCG report is available at ripple.com/lp/bcg-report-2026