With institutional demand high for cryptocurrencies, U.S. Bank has announced that it will provide a custody service, available to fund managers. Along with its partner NYDIG, the bank will offer to store private keys for bitcoin, bitcoin cash, and litecoin. Ethereum and other cryptocurrencies will be supported over time.
The traditional Wall Street institutions are no longer standing on the side lines looking in. As bitcoin and some of the other cryptocurrencies in this asset class begin to be seen as legitimate, these institutions are moving in.
Big and solid institutional banks such as U.S. Bank, and Bank of New York Mellon have stepped in to provide the kind of custody services for crypto that already protect trillions of dollars of traditional assets.
According to CNBC, U.S. bank is the 5th largest retail bank in America. It was founded in 1863, and has become one of the top ten custody providers with more than $8.6 trillion in assets in its custody.
Gunjan Kedia, vice chair of wealth management and investment services division at U.S. Bank said that they had surveyed their biggest clients to get a feel for their interest in cryptocurrencies. She said that the survey was positive and that “clients wanted the bank to move quickly”. She stated:
“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,”
The fact that established institutional banks like U.S. Bank are offering this kind of service is extremely important for fund managers. While they are arguably capable of being custodians of their own private keys, having such a recognisable big bank doing it for them will help to pacify any clients who are worried about such a new service.
Currently the custody service is only available to institutional clients of U.S. Bank in the U.S. or in the Cayman Islands. However, should a bitcoin ETF be approved by the regulators then demand is predicted to rise.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.