U.S Bank Dives into Bitcoin with Crypto Custody Offering
Crypto’s continued growth has seen an influx of institutional investors into the space. Most are exploring the unregulated asset class due to consistent demand from institutions.
In a recent turn of events, legacy banking institutions are also publicly announcing plans to provide crypto services to their high-value customers. The latest is the fifth-largest American bank, the US Bancorp.
U.S Bank Joins The Crypto Train
US Bank, a subsidiary of holding company US Bancorp, has announced that it would be launching a new custody product for managing cryptocurrencies, American Banker report. The fifth-largest American bank with over $554 billion assets under management (AUM) said it would partner with an unnamed sub-custodian.
It also said that it had been tapped to administer NYDIG's upcoming Bitcoin exchange-traded fund (ETF) if the Securities and Exchange Commission (SEC) eventually approved the proposal. The bank said that this was possible due to the long-standing relationship with the financial services firm.
US Bank said its decision to offer crypto custody services is due to growing clients’ demands for them with notable pension funds and insurance companies seeking exposure to the volatile assets. According to these clients, crypto is an asset class they would love to own a share of due to its meteoric rise in the past dozen years.
US Bank has been working behind the scenes and recently spearheaded an investment round for institutional cryptocurrency infrastructure firm Securrency. The deal, which also had other banking notables like State Street and WisdomTree Investments, saw $30 million infused into the Securrency platform.
The Minnesota-based American bank said it has been exploring the crypto space as far back as 2015. It also said that it has been able to develop the required infrastructure for cryptocurrency custody, such as anti-money laundering (AML) protocols, and know-your-customer (KYC) processes.
US Bank strategy chief Christine Waldron noted that things really picked up in the crypto space following a directive by the Office of the Comptroller of the Currency (OCC) for national banks to provide custody for their crypto customers.
Waldron also noted that the bank may not just custody the premier digital asset Bitcoin alone saying “it can’t just be a Bitcoin storyline.”
Legacy Banks Moving Into Crypto
Institutional investors have been largely reluctant to move into the crypto space following the foggy regulatory goalposts in the nascent industry.
But in a stellar year, many legacy banks are gradually looking to take a piece of the crypto pie. Some of the early adopters are Goldman Sachs and Morgan Stanley, who are currently planning to offer crypto-focused wealth funds for their clients.
Foremost American bank Bank of New York (BNY) Mellon is also in for the ride after it announced that it would be custodying crypto assets in the coming months.