Does anyone else think the phrase "cryptoasset industry" sounds like an oxymoron? It's not an industry if you don't produce anything. I can't help but think that if people keep trying to recreate traditional finance instruments in crypto, they're going to keep getting burned. They're going to learn the hard way that it's not a viable business model.
intuitively, that seems correct. but look around at the potential user base for these instruments---speculators (retail, institutional) who don't want to take custody themselves, mainstream folks who want a user/password to an app and not private keys, etc. you don't think there's a market for these services?
I think the market for those services will only last to the point where the custodians of those bitcoins start losing them. Which, in my mind, is pretty much guaranteed when these companies inevitably gather a nice big stash of coins in one place and probably don't take security seriously enough. There's a distinct likelihood some of these companies will have to pay out more in compensation for lost coins than they'll earn with their middleman fees. Either that, or the insurance costs for the company will be so high that their prices won't be very attractive for customers.
I could be wrong, but as things stand, I just don't see it going well for these businesses. If you are the custodian of a large number of bitcoins, you are literally painting a target on your back. The most secure way to use Bitcoin is if everyone holds their own coins, with no vast sums stored in one conveniently hackable place.