TL; Distribution DR
- US Bank begins providing cryto custody service to fund managers.
- Many US banks are considering doing the same.
- The strong demand for crypto custody service led the US bank to start providing the service.
A leading American bank, US Bank has announced its intention to offer a crypto custody service to fund managers.
The U.S. bank made the announcement on Tuesday, noting that the service would help investment managers store private keys or cryptos for sub-custodian NYDIG. While little crypto is currently available from the bank, the bank says it will be bringing more cryptocoins on board soon.
US banks join the crypto frenzy
The announcement from the US bank shows that major US banks have continued to join the crypto frenzy and view crypto as a legitimate asset. Other leading banks across the country, such as Bank of New York Mellon, State Street, and Northern Trust, have all announced plans to start providing crypto custody services to their customers.
However, banks in the United States began charging for crypto custody services after the Office of the Comptroller of the Currency (OCC) issued a letter approving banks in the country to provide crypto custody in July 2020.
Crypto custody services were only provided by exchanges like Coinbase, Gemini, Kraken in America before approval.
Why a U.S. bank wants to venture into crypto custody
The bank’s vice president for wealth management and investment Gunjan Kedia said in an interview that the bank interviewed clients to see if their interest was real after the crypto custodian had was legalized for banks last year.
“What we were hearing everywhere was that while every currency might not survive – there might not be room for thousands of coins – there is something about the potential of this class of coins. ‘assets and the underlying technology that it would be prudent for us to support for that,’ she said.
Some investment clients already have positions in bitcoin, while others are waiting for custody services to start, she said. US Bank is one of the first institutions to offer a direct custody product.
As it stands, the US bank only serves institutional managers with private funds in the US or the Cayman Islands, according to the bank.