Institutional interest in digital assets is on the rise, with more than 900 institutions in the United States holding spot Bitcoin ETF shareholdings exceeding $100 million. Asset management firms like BlackRock and Franklin Templeton have also launched tokenized treasury funds, with over $1 billion in treasury notes tokenized on public blockchain networks. Additionally, a survey conducted by KPMG in Canada found that financial services organizations in the region significantly increased their crypto holdings in 2023, with 22% more firms offering crypto asset products and services to clients compared to previous years.
Despite the growing interest in digital assets, data management remains a challenge for institutions. Isabella Henderson, Director of Product Strategy at Amberdata, stated that digital asset data is dense and complex, with each crypto exchange using different tickers and hundreds of thousands of asset instruments. This lack of standardization makes consistency and reliability a challenge for institutions. Amberdata has responded to this challenge by launching an open-source asset reference and classification tool called ARC, which aims to provide an institutional-grade security master database for digital assets, allowing institutions to have a more consistent view of the crypto sector.
ARC unifies front, middle, and back offices for institutions holding digital assets by collecting data on traded crypto pairs across various instruments. The tool provides transparency into the operations and use cases of digital assets, helping institutions with analysis, reference, trading, and other operations. ARC IDs map an asset’s associated instruments across the digital asset ecosystem, using a tagging classification system to flexibly classify industries and use cases. Henderson believes that ARC can help institutions keep accurate records of the dynamic universe of digital assets and optimize trade execution strategies.
Institutions also need data management tools to evaluate risks associated with digital assets, as executives expect risks to increase and the regulatory environment to become more complex. Chainalysis offers on-chain data to help institutions assess the risks associated with digital assets, such as understanding how widely distributed and liquid an asset is, and whether it is being used for illicit activities. Despite the potential benefits of digital asset management tools, it remains to be seen whether institutions will implement these tools immediately, given that digital assets represent a relatively new sector for them.
Amberdata expects institutions to adopt ARC moving forward, as mapping assets across exchanges and markets is a major pain point across the trading life cycle. The company has already initiated the process of ARC integration for a few institutions and believes that community contributions and insights will help keep the dataset relevant and up to date. However, challenges may arise with implementing digital asset management tools, as institutions may need to balance transparency with customer data privacy laws and confidentiality. While there is significant interest in digital assets among institutions, the adoption of data management tools like ARC may take time.
