Balance, a Canadian-based crypto custodian, provides services that have become qualified according to the rules of the Canadian jurisdiction. This development has been considered a breakthrough for the firm and the whole crypto market in Canada.
George Bordianu, CEO of Balance, underlined this achievement and explained that the new license will allow the company to offer improved custodial services while avoiding such collaborations with sub-custodians. Most of these competitors rely on external platforms such as Fireblocks or even Digital Vault; thus, Balance has developed its robust architecture independently, providing a more secure service to its clients.
This advancement comes at a crucial time as Canadian ETFs could see a shift. Their crypto assets are held in sub-custody by major U.S. exchanges such as Coinbase and Gemini. Bordianu stated that billions of dollars in retail assets from Canadian crypto ETFs are currently held in the United States, and there is a growing need to bring these assets back to Canadian soil.
This move will simplify operations and reduce costs for asset managers, fostering a more localized and efficient ecosystem for managing ETFs and mutual funds in Canada.
The implications of Balance's new status extend beyond simple custodianship. As the crypto market evolves with the introduction of tokenized real-world assets and the expansion of stablecoins, having a qualified custodian like Balance within Canada's borders is increasingly vital.
This local presence is crucial for developing a robust infrastructure capable of supporting the unique needs of the Canadian market. Bordianu compares the reliance on foreign custodians to the absurdity of the Toronto Stock Exchange needing to integrate with the US-based Depository Trust & Clearing Corporation for transaction settlements.
Bordianu's vision for Balance involves simplifying the complex landscape of crypto assets management, making it more accessible and cost-effective for new and existing asset managers. Such a strategic shift will likely contribute to the desire for more Canadian funds to keep their assets inside the country to gain more security, effectiveness, and sovereignty over Canada's financial assets in the crypto market.
Balance's qualified custodian status could catalyze the growth of the crypto sector in Canada. By reducing reliance on international sub-custodians, Balance aims to retain more capital within the country and streamline the operations of asset managers. This change is about keeping funds secured within Canadian borders and building confidence among investors about the stability and reliability of Canada's financial market infrastructure in handling digital assets.