On Tuesday (October 5), it appears that U.S. Bank National Association (aka “U.S. Bank”) , the fifth largest commercial bank in the U.S., according to the latest data from the Federal Reserve, has launched a crypto custody service aimed at investment managers.
According to a report by CNBC published earlier today, U.S. Bank, which is a wholly-owned subsidiary of U.S. Bankcorp (NYSE: USB), Gunjan Kedia, vice chair of the bank’s wealth management and investment services division, told CNBC that this new service will “help investment managers store private keys for bitcoin, bitcoin cash and litecoin with assistance from sub-custodian NYDIG” and that “support for other coins like ethereum is expected over time.”
On April 27, U.S. Bank announced via a blog post three new crypto-related initiative:
- “U.S. Bank Global Fund Services will offer a new cryptocurrency custody product for customers with the engagement of a sub-custodian for fund servicing. We are finalizing our sub-custodian selection and will announce additional details in the coming weeks once internal reviews are final.“
- “We recently announced our investment in Securrency – a developer of institutional-grade blockchain-based financial and regulatory technology, which named U.S. Bank among investors in its latest round of funding.“
- “U.S. Bank has been selected to administer NYDIG’s ETF bitcoin fund this year, pending regulatory approvals. It expands on the bank’s long-standing private fund servicing relationship with NYDIG.“
Other major U.S. banks that have already announced their crypto custody plans include Bank of New York Mellon, State Street, and Northern Trust.
Kedia also told CNBC that every asset manager she knows is “the potential of cryptocurrency as a diversified asset class.”
It seems that after the release by the Office of the Comptroller of the Currency (the “OCC”) of Interpretive Letter #1170 on 22 July 2020, which permitted OCC-regulated banks to custody virtual assets, Kedia “surveyed the firm’s biggest clients to determine if their interest was genuine” and discovered that “interest in crypto was broad and not limited to niche players, and that clients wanted the bank to move quickly.”
She told CNBC:
“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.“
She also mentioned that is U.S. Bank is “one of the first institutions to have a live custody product available.”
She went on to say that before accepting an investment manager as a client for the crypto custody service, the bank needs to “trace the origin of the client’s funds” (i.e. follow AML rules) and that this product is only available to “institutional managers with private funds in the U.S. or Cayman islands, according to the bank.”
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.