Crypto Custody Stocks Under Pressure as Hardware Wallet Risks Rise
Crypto custody stocks are under scrutiny as investors seek alternatives to hardware wallets like Ledger's Nano S, which has been impacted by a firmware flaw and is no longer supported.
Foundation, a company that wants to make crypto custody more accessible, announced Legacy Mode, which allows users to keep their existing wallet setup on an open-source foundation without having to rebuild everything from scratch.
The move comes as investors are looking for ways to escape the risks associated with centralized custodians like Coinbase, which holds coins for 9 of the 11 US spot bitcoin ETFs worth around $74 billion. BlackRock's iShares Bitcoin Trust saw significant inflows after a recent exploit, but it's unclear if this is connected.
Tanguma, a security expert, pointed out that centralizing assets can 'kneecap' them, and BitGo, which offers key splitting services, has seen its stock price drop since going public in January. The company bought NYDIG's institutional trading business for $42.5 million plus an earnout.