Northern Trust is Exploring the Launch of a Crypto Custody Service
Crypto custody might be the biggest buzzword among institutions over the next few years. Now, another institution is reportedly jumping on board with its own crypto custody service: Northern Trust Corp., a Chicago-based investment management company, has begun developing a crypto custody service.
The 129-year old investment management firm “has begun developing a way to secure digital assets held in custody”, according to a report from Bloomberg. The company is looking to get into the business of safeguarding digital assets like cryptocurrencies.
A crypto custody service is a valuable tool for institutional investors seeking entry into the industry. Institutional investors can participate in crypto trading while trusting their funds to a secure, regulated environment.
Northern Trust sees an opportunity to charge lower fees than existing service providers in the space.
“The fees right now the custodians are charging are pretty high, not the same fees that we get – ultimately, I believe unsustainable, because it needs to be an efficient model,” explained Pete Cherecwich, head of corporate and institutional business at Northern Trust Corp., in an interview with Bloomberg.
In terms of fees, Coinbase requires customers to have a minimum of $10 million they’re willing to invest. The company also charges a $100,000 setup fee and 10 basis points in monthly fees – significantly steeper than traditional custody services.
This isn’t Northern Trust’s first foray into crypto. The company already provides accounting services to a few funds that invest a small portion of their assets in crypto futures. Obviously, the launch of a crypto custody service is a far more direct way to participate in the industry.
In any case, Coinbase and other competitors can rest easy for now. Northern Trust will not be putting out a custody product for digital assets like cryptocurrencies for at least another 12 months.
Northern Trust’s stock fell slightly on the day, dropping by 0.72% to around $109.22 USD.