Custody solutions are now in place for institutional investors within Dubai, United Arab Emirates, and Jersey. These solutions are essential for institutions like asset managers and family offices that operate under strict compliance and risk management frameworks.

Custody solutions have modular smart contracts built in to assist institutions with regulatory compliance requirements. Komainu, an institutional-grade regulated digital asset custody provider, started offering custody support for Lido Staked ETH (stETH) on May 27.

Custody solutions are critical for all institutions, but acutely so for intermediated institutions. These range from private equity firms to asset managers and family offices, all of whom operate under rigorous compliance and risk management structures.

"Historically, the limited availability of regulated custodians or MPC wallet providers supporting stETH was a significant barrier for these institutions," - Gilbert

Second, crypto-native firms are simply more accustomed to dealing with crypto assets directly and thus typically do not use third-party custody solutions. At the same time, US exchange-traded fund (ETF) issuers are still waiting for regulatory clarity on launching Ethereum staking ETFs tied to custody solutions.

"Many asset managers, custodians, family offices and crypto-native investment firms are actively exploring staking strategies," - Gilbert

The growing choice of custody solutions, often touted as a no-brainer first step that will drive institutional interest in Ethereum staking, are helping.

"Institutions find liquid staking tokens like stETH useful because they directly address challenges related to capital lock-ups and complex custody arrangements," - Gilbert