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Banking Giant Launches Custody Services for Bitcoin

source-logo  blockworks.co 05 October 2021 14:20, UTC

US Bank rolled out its crypto custody services for fund managers on Tuesday, as one of the country’s largest banks doubles down on its commitment to the space.

The custody services are intended for institutional investment managers with private funds in the US or Cayman Islands who would like to secure their bitcoin, according to the company. The Minneapolis-based bank has selected NYDIG as the first crypto sub-custodian announced in its network of providers.

US Bank Wealth Management and Investment Services had about $8.6 trillion in assets under custody and administration and $282 billion in assets under management, as of June 30.

The company’s investment management clients have studied investor demand and are working to accommodate their own clients’ interest in cryptocurrency, Christine Waldron, the bank’s chief global strategy officer, said in an email.

“Bitcoin is the coin that we are seeing the greatest client demand for today,” she explained. “We will continue to evaluate additional coins from both a client demand and a risk perspective, and will add coins once and if they satisfy our stringent risk standards.”

NYDIG provides bitcoin technology and financial services solutions to banks, insurers, corporations and institutions. NYDIG and Fiserv revealed in June they were teaming up to help consumers get bitcoin into their bank accounts. Later that month, the National Cash Register (NCR) and NYDIG partnered to help US banks offer bitcoin to clients.

“NYDIG is excited to partner with US Bank to provide its customers with a custody solution that meets the highest security, compliance and regulatory standards,” Robert Gutmann, the firm’s CEO, said in a statement.

US Bank has been developing its blockchain initiatives since 2015 as it “saw this trend coming,” Waldron previously told Blockworks.  

The company had announced in April that it would administer NYDIG’s bitcoin ETF this year, pending regulatory approvals. That same month, US Bank participated in a funding round for blockchain-based financial and regulatory technology firm Securrency.

Testing the waters

Large traditional banks continue to dip their toes into the crypto realm. BNY Mellon, the world’s largest custodian bank, revealed plans earlier this year to eventually treat digital assets like clients’ more traditional holdings by using a new platform that was in the prototype phase. 

Rival bank State Street created a new division focused on the shift to digital finance in June. It later partnered with crypto asset data and software provider Lukka to help it provide digital and cryptocurrency asset fund administration capabilities for its private funds clients.

Most recently, Bank of America officially launched its coverage of digital assets on Monday. Candace Browning, the bank’s global head of research, had called cryptocurrencies and digital assets “one of the fastest growing emerging technology ecosystems” in an internal memo obtained by Blockworks.

US Bank’s custody offerings round out the list of services that cryptocurrency funds need, such as accounting, administration and investor services, Waldron noted.

“We are continuing to stay close to cryptocurrency to evaluate further offerings more broadly in the investment services space,” she said.

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