How Do Custody Solutions for Institutional Investors Affect the Cost of Carry?

Custody solutions for institutional investors are a significant component of the cost of carry for cryptocurrencies. These services provide high-level security for digital assets, which is a crucial requirement for institutions.

The fees for these custody services, which can include insurance, add to the overall cost of holding the asset. A more robust and expensive custody solution will increase the cost of carry, which can, in turn, contribute to a higher premium in the futures market (contango).

The development of more efficient and secure custody solutions can help to reduce these costs over time.