Since the launch of BitcoinMarket in 2010, crypto exchanges have been buffeted by constantly changing market dynamics. From evolving customer needs and rapid crypto cycles to new regulatory frameworks, crypto exchanges have lived by the mantra that the only constant is change.
Now, with the finance industry estimating that 10% of the world’s assets will be tokenized by 2030, exchanges are presented with a new opportunity. Ripple’s latest custody quick guide for Crypto Exchanges outlines the core ways exchanges can access the digital asset ecosystem as part of this shift.
By deploying robust, institutional digital asset custody infrastructure, crypto exchanges can overcome these challenges and unlock new revenue models across digital asset use cases. Let’s dig into a few of the ways exchanges can prepare for this next evolution.
Capitalizing on Digital Asset Use Cases
As trusted platforms for buying, selling and trading crypto assets, exchanges are already responsible for billions of dollars in trading volume. But the incoming $20 trillion digital asset market opportunity represents enormous new growth potential across asset management, tokenization, stablecoin issuance and beyond.
Key to capturing this market is a highly secure and customizable institutional crypto custody solution. Banks and financial institutions have long offered institutional custody services to help customers store, manage and trade traditional assets. But the explosion in digital assets combined with rising institutional investors' interest in tokenized real-world assets means there is now a rush to support customers with digital asset custody options.
This essential infrastructure enables exchanges to address many of their customers’ core demands, including: institutional-grade security, access to a wide range of protocols and tokens, reduced gas and transaction fees, multiple validated counterparties, and compliance support across regulatory jurisdictions.
But deploying an institutional crypto custody solution and tokenization infrastructure with customizable control over operating and security models—including flexible deployment or private key management—will enable an even greater range of use cases for exchanges and their customers. These use cases include:
Transactions and settlement through custody services
Directional trades and derivative positions
Crypto asset spot trading from low cap to blue-chip coins
Segregation of digital assets to meet new regulatory cold storage requirements
Prioritizing Compliance
Cold storage mandates in countries like Japan and Hong Kong are illustrative of the impact new regulations can have on digital asset custody solutions. More importantly, these guidelines reinforce the role that crypto custody plays in adhering to global compliance parameters.
Institutional clients are constantly navigating changing frameworks across jurisdictions as countries seek to provide regulatory clarity on digital assets and blockchain. From MiCA in Europe to evolving regulatory frameworks in APAC, these efforts aim to define the role of digital asset custody and often involve guidance tailored to the complexities and risks posed by a crypto custody service versus traditional custody.
Exchanges that choose a custody provider with a compliance-first mindset gain the ability to adhere to stringent regulatory requirements and can set themselves apart from the hundreds of other exchanges on the market to better attract institutional clients.
Supporting Institutional Adoption
As digital assets continue to grow into mainstream financial instruments, the demand for bank-grade integrated custody solutions will only increase. Deployed properly, this infrastructure has the potential to transform the financial service industry. Custody solutions for crypto exchanges are an opening to enhance trust and credibility across retail and institutional investors and create new revenue-generating opportunities.
Ripple Custody allows exchanges to confidently grow their volumes and profit margins without compromising security, compliance or operational efficiency. Its proven ability to deliver a competitive edge through streamlined digital asset management, reduced costs and strengthened security measures has earned the trust of leading banks, exchanges and companies across more than 15 countries. Its single, fully integrated platform supports the secure transfer and settlement of digital assets, tokenization and management of real-world assets, and connections with DeFi and Web3 applications—all without having to assume the risk and expense of building an in-house custody solution.
Download Digital Asset Custody: Quick Guide for Crypto Exchanges to learn more about how crypto exchanges can outpace the competition with Ripple Custody.
