World’s largest banks will custody crypto in 2025 says this $12tn prediction

Analysts forecast the four largest banks in the world will start offering crypto custody in 2025.

According to Galaxy Research, the Office of the Comptroller of the Currency (OCC) will create a pathway leading to the world’s top four custody banks to offer digital asset services.

These are BNY Mellon, State Street, JPMorgan Chase, and Citi. Collectively, they hold more than $12 trillion in assets under management.

It would signal a near-complete acceptance of the cryptocurrency industry as a legitimate asset for traditional finance. Even if 1% of capital from these four banks were to flow into crypto, it would translate to a market capitalisation magnitudes higher than what it is today.

With such an institutional push, Galaxy predicts it will only be a matter of time before nation-states start contributing.

2% or more

BlackRock sent shockwaves when they told investors to treat Bitcoin like Apple or Amazon.

The asset management behemoth said a 1% to 2% allocation is reasonable.

But until now, no large firm has followed through. Next year will be different, said Galaxy Research.

“At least one top wealth management platform will announce a 2% or higher recommended Bitcoin allocation,” said analysts.

Unaligned nations

After corporate adoption comes nation-state adoption.

Lots of the chatter surrounding a Bitcoin strategic reserve has centred around the US.

That’s because crypto pundits are whispering in Donald Trump’s ears to start buying Bitcoin on behalf of the US government — even though some Bitcoiners think it’s a bad idea.

However, Galaxy Research said that the US government will be left behind in 2025.

“Competition among nation states, particularly unaligned nations, those with large sovereign wealth funds, or even those adversarial to the United States, will drive the adoption of strategies to mine or otherwise acquire Bitcoin,” said analysts.

Comeback season

Despite Bitcoin hogging the spotlight, Galaxy analysts foresee Ethereum making a strong comeback in the year to come.

They predict the ETH/BTC ratio, which measures Ethereum’s value compared to Bitcoin, will dip below 0.03 in 2025 before bouncing back above 0.06 by year-end.

Since Ethereum’s shift to proof-of-stake in the 2022′s “Merge” upgrade, the ratio has fallen steadily as Bitcoin surged ahead. The 0.06 level hasn’t been seen since the middle of 2023.

Galaxy Research also says new regulations might boost Ethereum’s value, especially for decentralised finance apps.

“Anticipated regulatory shifts will uniquely support Ethereum and its app layer, particularly DeFi, re-igniting investor interest,” they wrote.

Crypto market movers

• Bitcoin is down 1.8% over the past 24 hours to reach $94,170.
• Ethereum lost 0.6% over the same period to $3,330.

What we are reading

• Terra’s Do Kwon to be sent to US to face trial on fraud charges, minister says — DL News
• Trump Announces Team Working With AI Crypto Czar: What We Know — Unchained
• Memecoin Degens Raise Millions for Rare Cancer Research After a Father’s Plea — CoinDesk
• Solana co-founder allegedly kept millions in staking rewards from ex-wife in ‘acrimonious’ divorce — DL News
• US IRS finalizes controversial tax rule requiring ‘DeFi brokers’ to collect user trading information — The Block

Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.