Institutional interest in digital assets is gaining momentum, with over 900 institutions in the United States disclosing spot Bitcoin exchange-traded fund (ETF) shareholdings exceeding $100 million. This totals to $10.7 billion combined, and leading asset management firms like BlackRock and Franklin Templeton have launched tokenized treasury funds. Furthermore, more than $1 billion in treasury notes has been tokenized on public blockchain networks. A bi-annual survey conducted by KPMG in Canada found that institutional investors in the region increased their crypto holdings significantly in 2023, with 22% more financial services organizations offering crypto asset products and services to clients compared to previous years.
However, despite the growing interest in digital assets, institutions are facing challenges with data management. Isabella Henderson, Director of Product Strategy at Amberdata, emphasized that digital asset data is dense and complex, with each crypto exchange using different tickers and asset instruments. This lack of standardization in the digital asset space results in a fragmented view of the sector for institutions. To address this issue, Amberdata launched an asset reference and classification tool called “ARC,” an institutional-grade security master database for digital assets. This tool aims to provide transparency and consistency in viewing the digital asset sector.
ARC, the open-source dataset by Amberdata, enables financial institutions to segment and view the digital asset sector consistently through a combination of reference details, classification, and categorization. It unifies front, middle, and back offices for institutions holding digital assets by tracking traded crypto pairs across various instruments. ARC provides detailed information on token addresses, contract and trade specifications, price limits, exploits, and more. This tool helps institutions keep records of the dynamic universe of digital assets and optimize trade execution strategies.
Institutions need data management tools to evaluate risks associated with digital assets as they expect risks to increase and the regulatory environment to become more complex. Chainalysis, a blockchain analysis company, offers on-chain data to help institutions understand the distribution and liquidity of assets, usage in different segments of the crypto economy, and the level of illicit or risky behaviors associated with them. While digital asset risk should be a mainstay on the board agenda for organizations actively using digital assets, there is a need for effective tools to assess and manage these risks.
It remains to be seen if institutions will immediately implement digital asset management tools, given that this sector is relatively new to them. However, Amberdata expects institutions to adopt ARC in the future, as many financial institutions and crypto-native firms have expressed the need for mapping assets across exchanges and markets. ARC integration has already commenced for some institutions, and being open-sourced, it will progress through community contributions and insights. Challenges may arise in terms of data privacy laws and confidentiality for institutions building products on blockchain infrastructure, as they need to balance transparency with protecting sensitive information and processes.
