Institutions Face Data Management Challenges in Adopting Digital Assets
The interest of institutions in digital assets is growing. By the end of Q1, over 900 US-based institutions had disclosed holdings of spot Bitcoin exchange-traded funds (ETFs) worth more than $100 million each, totaling $10.7 billion.
Leading 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.
A recent bi-annual survey conducted by KPMG in Canada revealed that institutional investors in the region significantly increased their crypto holdings in 2023. The survey found that 22% more financial services organizations offered crypto asset products and services to clients compared to previous years.
However, institutions are facing challenges in managing digital asset data. Isabella Henderson, Director of Product Strategy at Amberdata, explained that digital asset data is complex and inconsistent due to the use of different tickers and asset instruments by various crypto exchanges. This lack of standardization results in a fragmented view of the crypto sector for institutions.
To address this issue, Amberdata has launched an institutional-grade security master database called “ARC.” ARC is an open-source dataset that provides transparency and consistency in viewing the digital asset sector. It combines reference details, classification, and categorization to offer a unified view of the operations and use cases of any digital asset.
ARC collects data from Amberdata, which tracks traded crypto pairs across spot, options, and futures instruments. It provides information on token addresses, contract and trade specifications, price limits, exploits, and more. ARC IDs map an asset’s associated instruments across the digital asset ecosystem using a tagging classification system.
In addition to data management, institutions also require tools to evaluate the risks associated with digital assets. A Deloitte poll shows that executives expect digital asset risks to increase and the regulatory environment to become more complex. Chainalysis on-chain data can help institutions evaluate these risks by providing insights into asset distribution, liquidity, and potential illicit or risky use cases.
While the adoption of data management tools for digital asset management may face challenges, Amberdata expects institutions to use ARC in the future. The integration of ARC has already begun for some institutions, and the open-source nature of ARC allows for community contributions and insights to keep the dataset relevant and up to date.
However, challenges may arise in terms of data privacy and confidentiality for institutions building products on blockchain infrastructure. They will need to balance transparency with customer data privacy laws and the need to retain certain processes or business logic as private.
Overall, institutions recognize the need for data management tools to effectively adopt digital assets and navigate the evolving landscape of the crypto sector.
