Self-custody: driving digital asset adoption

If you were to go back a decade, a typical retail investor’s portfolio would have comprised familiar, established financial instruments, including stocks, bonds, precious metals, and real estate. So-called digital assets weren’t even part of the conversation. Even as crypto assets like Bitcoin gained traction toward the end of the 2010s, they remained highly speculative and far from mainstream adoption. In recent years, however, the tide has quickly turned, with institutional backing and regulatory changes helping to shift digital assets beyond a niche interest toward genuine investment streams. And the momentum is showing no signs of slowing down.

Digital assets are often equated with crypto assets, but the term encompasses a much broader range of assets, including security tokens, non-fungible tokens (NFTs), central bank digital currencies (CBDCs), and tokenized assets. By 2028, nearly 1 billion people are expected to use digital assets,¹ while 66% of retail investors plan to integrate them into their portfolios within the next five years.²

Until now, new players – such as fintech startups, crypto exchanges, and decentralized platforms – have dominated the space, while established financial institutions remained on the sidelines. As digital assets mature into legitimate financial instruments, financial institutions can unlock new growth opportunities by offering customers a secure and familiar digital asset management experience in a rapidly evolving market.

Why financial institutions must act quickly

Major institutions like Visa and Mastercard are already moving quickly to embed digital asset solutions into their ecosystems. Meanwhile, regulatory clarity is improving, with frameworks like the EU’s Markets in Crypto-Assets (MiCA) regulation – which aims to protect consumers and foster innovation by harmonizing rules for previously unregulated digital assets – and the approval of crypto-based ETFs in the US clearing the way for wider adoption.

However, banks should not see this step as merely keeping up with the times – embracing digital assets is a major growth opportunity. Offering digital assets will unlock new revenue streams, strengthen customer relationships, and future-proof banks in the digital world. Crucially, banks have a powerful strategic advantage over newer players and may hold the key to true mainstream adoption. 

According to analysts, 55% of consumers believe digital asset adoption depends on the involvement of established banks, fintechs, and other financial services³ – suggesting many are waiting for the trusted institutions to enter the market before they invest. More interestingly for banks, 39% of existing crypto owners say they would switch banks to one offering digital asset services, highlighting the competitive advantage for early movers.

For financial institutions, the opportunity is clear. The question is: how can they seize it?

Turning digital asset security into a competitive advantage

“Retail investors are increasingly looking to diversify into digital assets,” says Alex Gatiragas, Head of Solution Experience at G+D Netcetera. “However, for many, adoption hinges on access to secure, user-friendly custody solutions. Banks are uniquely positioned to provide them.” 

Security remains one of the biggest barriers to digital asset adoption. The sheer complexity of custody management, coupled with the fragmentation of service providers in a still maturing industry, has been an obstacle to consumer adoption and deterred some financial institutions looking to enter the space. However, herein lies the big opportunity for financial institutions. 

As trusted financial entities, banks and other financial institutions already have the confidence of consumers – nearly two-thirds (65%) would prefer to access digital assets through their existing bank rather than through third-party platforms.⁴ By leveraging this trust, banks can attract new customers while deepening relationships with existing ones.

There is also a convenience factor. Digital asset holders often rely on fragmented, third-party platforms that require separate apps, logins, and complex recovery steps – creating friction points and security fears. At the same time, the average customer interacts with their bank at least twice daily for payment-related matters, so integrating digital assets is a logical next step. The ability to manage both fiat and digital assets within a trusted banking app or wallet removes any friction and encourages wider adoption, positioning the banks as a primary gateway for digital asset management.

Overcoming barriers to adoption

Yet, despite the clear opportunities in the digital asset space, financial institutions still face several challenges integrating digital assets into their offerings. Incumbent banks, often burdened by legacy infrastructure and technical debt, lack the resources to develop digital asset services. And even if these technical challenges are addressed, securing buy-in across the organization is difficult due to ongoing regulatory uncertainty. There has been some progress on this front; however, the lack of universal standards for digital asset governance and varying legislation across regions has some financial institutions reluctant to engage at this moment. 

For consumers, the security and usability of digital asset custody are major obstacles. Most existing solutions rely on self-custody mechanisms, requiring users to manage 12- or 24-word seed phrases – a random series of words used to recover access – which, if lost or misplaced, render the digital assets irretrievable. Without an intuitive recovery option, the fear of permanent loss will deter many consumers from entering the space. 

There is also still a steep learning curve associated with this new asset class – 39% of consumers familiar with crypto assets say they are “not very confident” in them, while 36% question their reliability and security.⁵ To bridge the knowledge gap and provide customers with greater confidence in the security of their digital assets, banks must simplify the onboarding and the overall user experience of self-custody wallets. 

Giving consumers control of their digital assets

To drive adoption and address consumer concerns, financial institutions should focus on these five strategic approaches:

1. Offer secure digital asset custody: Self-custody is the most effective solution for managing digital assets, but it must be user-friendly and include recovery mechanisms to prevent irreversible losses. As trusted financial institutions, banks are well positioned to incorporate this service into their digital offerings and subsequently drive adoption.
2. Leverage existing banking infrastructure: Financial institutions have the advantage that customers interact with their infrastructure, such as payment cards and mobile apps, every day. They can leverage this familiarity to introduce digital asset management services via these trusted and reliable mechanisms.
3. Balance security with ease of use: Even after leveraging consumer trust, financial institutions must consider how they balance usability with security. Finding a convenient and secure solution to replace convoluted seed phrases is a good place to start.
4. Stay ahead of regulatory developments: With the regulatory landscape changing quickly, banks need to be proactive and keep pace with new developments and standards in order to ensure compliance, mitigate risks, and build customer trust.
5. Partner with experts: Given the many regulatory and technical challenges of integrating digital asset and custody management solutions, it may be worthwhile to partner with an established technology partner. This enables financial institutions to focus on strengthening customer relationships and driving adoption.

Rather than developing self-custody solutions themselves – a costly and complex endeavor – financial institutions can consider adopting a modular custody solution that enables retail investors to retain full control of their digital asset via self-custody, while eliminating the risks associated with traditional seed phrases. The fail-safe recovery service uses key sharding to securely restore access without compromising self-custody – ensuring that customers retain full and irrevocable ownership of their digital assets, even if keys are lost.

The solution empowers financial institutions to: 

• Seamlessly integrate digital assets: Offer customers a secure and straightforward way to manage and store digital assets. The innovative cold storage card and mobile app simplify self-custody while reducing integration and regulatory challenges.
• Ensure robust security for digital assets: Provide institutional-grade security with G+D’s key fragmentation and recovery capability, mitigating the risks associated with self-custody while ensuring customers’ investments are protected and easily recoverable.
• Leverage the expanding blockchain ecosystem: Connect to a growing list of value-added services, unlocking new business opportunities as the crypto asset market evolves.

By integrating such solutions, financial institutions can boost wallet engagement, generate new revenue streams, and accelerate time to market (at a lower cost). Meanwhile, customers benefit from full and irrevocable ownership of their digital assets, peace of mind, and the familiarity of managing everything within their existing banking app. 

With consumer demand for digital assets showing no signs of slowing down, the financial institutions that move fast to leverage their trusted status will reap the most rewards.

Published: 08/05/2025