U.S. Bank Announces Bitcoin Custody Service
U.S. Bank will launch its crypto custody service amid ever-increasing interest in digital assets.
- U.S. Bank will make cryptocurrency custodial services available to investment managers, according to CNBC.
- U.S. Bank is not the first major player to make such a move.
- The update suggests that institutional interest in cryptocurrency is continuing to grow.
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U.S. Bank, the fifth-largest retail bank in the United States, has announced a Bitcoin custody service.
Big Banks Open to Crypto Custody Service
It will initially offer Bitcoin, though custody services for Bitcoin Cash, Litecoin, Ethereum, and other assets will likely come over time, according to the vice chair of U.S. Bank’s wealth management and investment services division, Gunjan Kedia.
This move suggests that deeply entrenched U.S. financial institutions and their clients are becoming increasingly interested in cryptocurrencies. In an interview, Kedia said:
“Our clients are getting very serious about the potential of cryptocurrencies as a diversified asset class… I don’t believe there’s a single asset manager that isn’t thinking about it right now.”
While fund managers could buy digital assets themselves (and therefore have to store their own private keys), many want the legacy financial institutions that already safeguard trillions in assets to secure their crypto assets for them.
The service will be offered in partnership with NYDIG, a Bitcoin subsidiary of Stone Ridge Asset Management.
Other Banks Also Offer Crypto Services
Other large banks have already made similar moves, seemingly back-to-back. In February, BNY Mellon announced that it would offer its clients Bitcoin custody. Roman Regelman, BNY’s CEO of Asset Servicing and Head of Digital, acknowledged that “digital assets are becoming part of the mainstream.”
In March, within days of Morgan Stanley announcing three different funds with which its clients could attain Bitcoin exposure, Goldman Sachs announced it would be launching a “full spectrum” of investment products in digital assets. Mary Rich, Goldman’s VP of Digital Assets, said the prospect of blockchain being the “dawn of new Internet”—as well as the desire for a hedge against inflation—might explain their clients’ interest.
Moreover, State Street announced in April their own cryptocurrency trading platform with a “smart custody routing program.” Later that month, JP Morgan made an announcement for its own Bitcoin fund along with custodial services.
As of May, hundreds of banks across the U.S. had already enrolled in the New York Digital Investment Group’s (NYDIG) crypto custody program. The president of NYDIG, Yan Zhao, has warned that banks will lose customers to newer companies like Coinbase, Square, Paypal, and Robinhood if they do not provide crypto services.
An August survey of U.K. institutional investors and wealth managers found that nearly three quarters sought to increase crypto exposure between now and 2023, and some big banks are now rolling out critical infrastructure to make it easier for institutions to do so.
Disclaimer: The author of this piece owned BTC, ETH, and several other cryptocurrencies at the time of writing.