Bitcoin and Ether are notoriously difficult to store securely and approaching the value of the global gold market. This is a $500 million a year business waiting to happen for one of Canada's big banks. Banks have the reputation, technical staff, security, and insurability, to become major players in the future market of storing cryptocurrency.
Cryptocurrencies liberate people from the need to use the financial system. There is no dependency on banks, except for exchanging to money, which largely relies on banks. But there's an opportunity for banks to go back to their roots as trusted places to store wealth. A Canadian bank could likely attract 5% of the world's cryptocurrency for storage if they could offer a secure, fast, insured service. It would immediately be used by institutional investors, high net worth individuals, and a significant portion of the individuals who hold smaller amounts of cryptocurrency.
Ballpark Figure For Revenue Per Year
A bank service for storing cryptocurrency could likely start off charging 1% per year. Napkin math of 5% of BTC/ETH market cap (>$1 trillion CAD) x 0.01 per year = $500 million per year in revenue.
$500 million a year is significant even for a major bank like TD, which could boost their annual income by around 4%. But there'd also be spin off benefits in the form of lending, branding, and entering into the next stage in the evolution of banking. Undoubtedly the bank that is holding $50 billion of cryptocurrency would find many other opportunities coming their way.
There are already some players in this market in Canada, such as Knox Custody, and American companies like BitGo that offer their storage services. There's a model to follow, and it's one that benefits enormously from scale. A secure cryptocurrency storage operation can store $1 of Bitcoin just as easily as it can store a trillion dollars. Scalability means low operating costs and an understandable model which reduces risk, as opposed to other businesses like cash storage that have thousands of points of failure (not all cash makes it to it intended destination). So although cryptocurrency storage is certainly not without risk, it's controllable in that a small secure system can be used and then accessed by other arms of the bank without introducing additional risk because it's a digital value store that's accessed digitally.
With record high cryptocurrency prices, it's becoming harder and harder for companies in the financial services/investment/e-commerce space to ignore. Secure storage is just one of many services that are required for a robust ecosystem and I expect a surge of interest in innovative models in 2021.