Key takeaways
- Leading retail bank, US Bank launches custody service for Bitcoin in partnership with NYDIG.
- Other banks have stated intentions to follow suit.
- Despite current regulatory uncertainty, the crypto-industry expects more banks to adopt cryptocurrencies.
Cryptocurrencies are going more mainstream as the legacy finance sector is beginning to show signs of not being able to ignore it anymore. Over time, multiple banks in the U.S. have announced plans to cater to the cryptocurrency investment interest of their clients.
The latest mover however has been the U.S.’s fifth-largest retail bank, US Bank, which announced that its cryptocurrency custody service had become available to fund managers in an official press release.
According to the Bank, the custody services are intended for institutional investment managers with private funds in the U.S. or Cayman Islands who would like a safekeeping solution for Bitcoin private keys. The bank however plans to support other cryptocurrencies including Ethereum soon.
For now, the bank plans to facilitate the custody service with the help of a network of sub-custodians. Already, it has picked NYDIG, a leading technology, and financial services company dedicated to Bitcoin, as its first crypto sub-custodian.
US Bank states that the move was necessitated by growing cryptocurrency interest from clients over the last few years, coupled with accelerated moves by their clients in the fund management sector to offer cryptocurrency. According to Gunjan Kedia, US Bank’s Vice-chair of Wealth Management and Investment Services, the bank is thrilled to finally be able to offer a working product to their clients.
“Our clients are looking for a service offering that is consistent with U.S. Bank’s exceptional standards of quality and risk management. Integrity and expertise are critical to safeguarding our clients’ most valuable assets, so we’re thrilled to offer our institutional clients NYDIG’s industry-leading Bitcoin expertise, backed by the financial strength of U.S. Bank,” Kedia says.
US Bank is not alone in providing solutions to help its clients gain exposure to cryptocurrencies. With the growing interest that cryptocurrencies have seen from institutional investors, major players in the traditional finance world including Bank of New York Mellon, State Street, and Northern Trust have all announced plans to custody digital assets. Others such as JPMorgan, Morgan Stanley, and Wells Fargo have opted to offer their wealthy clients exposure to cryptocurrency funds on request.
According to a recent survey by Block data, as much as 55% of the world’s top financial institutions already have some form of exposure to cryptocurrency and blockchain technology. They have however been largely restricted by uncertain regulations in their jurisdictions. Case studies include banks in Nigeria, the largest black nation, and India. In Nigeria, the central bank placed a ban on banks facilitating transactions with cryptocurrency exchanges indefinitely. India also made similar regulations that it has however reversed.
Key market players in the crypto-industry are of the opinion that in the long term, there will be clarity and a lot more adoption of cryptocurrencies by the traditional sector. For Binance CEO Changpeng Zhao, banks that refuse to adopt cryptocurrencies will pay a huge price for their indecisiveness. Michael Saylor, CEO of MicroStrategy however, thinks that it has always been “inevitable that banks would embrace Bitcoin.”
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