U.S. Mega Bank Sets Up Bitcoin Custody Service, With Other Cryptos To Follow
U.S. banks have been taking the plunge into crypto. The rising popularity of the crypto market has seen more demand from banks’ customers for more exposure and although banks are prohibited from directly maintaining self-custody of cryptocurrencies, they are turning to third-party solutions to gain exposure. The latest in the long line of banks rolling out crypto products is U.S. Bancorp.
The bank announced that it would be launching a bitcoin custody service for its customers. Partnering up with sub-custodian NYDIG, the bank launched its first crypto custody service a year after a key regulator had announced that U.S. banks were allowed to custody digital assets. U.S. Bancorp is the 5th biggest bank in the United States with over $8.6 trillion in assets under custody.
Rising Demand From Customers
CNBC reported that the bank had carried out a survey to gauge the interest from its customers for crypto products. The survey uncovered huge interest across the firm’s biggest clients, prompting the bank to begin working on ways to provides its clients exposure to the crypto market. Gunjan Kedia, Vice-Chair of U.S. Bancorp’s wealth management and investment services division, explained that some of its clients had already directly invested in the crypto market, but others had waited for custody services to be released. The custody service will enable investment managers to crypto private keys, in conjunction with NYDIG.
“What we were hearing across the board is that while every currency might not survive – there may not be room for thousands of coins – there’s something about the potential of this asset class and the underlying technology that would be prudent for us to stand up support for it.”
U.S. Bancorp will add support for other cryptocurrencies as time goes on. Interest in crypto and crypto products is broad and investors are beginning to see the potential of cryptos as a diversified asset class. “I don’t believe there’s a single asset manager that isn’t thinking about it right now,” Kedia said.
Institutional Investors Betting On Crypto
Interest among institutional investors is on the rise. Inflows into the market had fallen off during the low months of July. But recent weeks have seen market inflows recover from previous lows. The past 7 weeks of inflows have totaled $411 million, and confidence in bitcoin is returning among the big players.
U.S. Bancorp is not the only big player in the crypto custody service race. Bank of New York Mellon, State Street, and Northern Trust are big banks that have also announced their intention to launch their own custody services for cryptocurrencies.
Kedia also expressed that U.S. Bancorp has seen a lot of interest from its clients in crypto ETF. ETFs are currently still pending for the SEC, but clients are ready to jump and invest in them. “We have a lot of funds who are hoping to invest in ETFs. Some literally want custody contracts signed the day the SEC approves an ETF.”Source