The U.S. financial service provider U.S. Bank announced its expansion into crypto with a cryptocurrency custody service.
With the new service, investment managers can store private keys for bitcoin, bitcoin cash, and litecoin. According to Gunjan Kedia, vice chair of the wealth management and investment services division, additional coins like ethereum are next.
Moreover, the bank will partner with sub-custodian NYDIG to store the keys.
“Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class,” Kedia said. “I don’t believe there’s a single asset manager that isn’t thinking about it right now.”
Currently, U.S. Bank has around $8.6 trillion in assets under custody, revealed from data from the Federal Deposit Insurance Corp. According to Kedia, U.S. Bank is one of the first institutions with a live custody product available to investors.
As it stands the product will serve only institutional managers who hold private funds in the U.S. or Cayman Islands. In addition, to onboard a manager, the bank will trace the origins of the client’s funds through industry standard anti-money laundering and KYC checks.
While U.S. Bank may be among the first with a live custody product, other major banks understand the importance of crypto. Bank of America recently launched a crypto and blockchain research team.
In addition, a slew of major international banks joined in unison against Basel rules for crypto risks. Lenders such as JP Morgan and Deutsche Bank opposed the rule that banks must set aside one dollar in capital for every dollar in bitcoin owned.
ETFs on the horizon
Along with the new custodian offerings, U.S. Bank eyes potential crypto-related ETFs for investors. “We have a lot of funds who are hoping to invest in ETFs,” Kedia said. “Some literally want custody contracts signed the day the SEC approves an ETF.”
At the moment, there is a pile of ETF applications on the desk of SEC chairman Gary Gensler. From Bitcoin ETFs from Fidelity Investments and Bitwise, to Ethereum ETFs from Kryptoin. Already the SEC has delayed the VanEck Bitcoin ETF for over three years.
However, in a recent speech from Gensler, the regulator hinted at potential support for a futures-based bitcoin ETF.
While ETFs and regulations are in air, banks and major traditional financial institution continue to pour into the crypto space.
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