Mark Weaden
The fifth-largest retail bank in the United States announces plans to launch a cryptocurrency custody service to fund managers
The planned service will help to ensure investment managers can offer safe and secure cryptocurrency portfolios, storing private keys for Bitcoin, Bitcoin Cash, and Litecoin. While the initial offering will focus on these specific tokens, there is scope to support additional tokens like Ethereum over time.
With a desire to cater to the growing number of cryptocurrency investors, we are seeing a variety of major financial institutions and banks maneuver towards crypto.
What will the custody service involve?
The U.S. Bank launching a cryptocurrency custody service is the latest sign that the established financial institution is turning mainstream. The hope for crypto is that it will be seen as a legitimate asset class, which is further solidified by moves such as this.
This year alone, we’ve covered banks like BNY Mellon, JPMorgan Chase, Northern Trust, and State Street announcing plans to custody digital assets. The progress is clear and it’s exciting to see how far things have come in a short space of time.
The demand from customers is what drives these kinds of moves. The high volatility of the market means the possibility of trading on the cryptocurrency market is extremely appealing. Asset managers must feel the demand and this has trickled through to those that make the big decisions.
With nearly $8.6 million worth of assets, the U.S. Bank is as big as they come. At first, many of the big investment firms and banks were holding crypto portfolios for their biggest clients. But, as time has gone by, investments have been opened up more broadly and swaying away from niche clients alone.
The demand for crypto soars
The most exciting aspect of crypto doesn't relate directly to the potential for gains in the market, rather the thriving fintech industry that underpins it. The complication for investment managers is which currencies are worth building portfolios around, as who knows how long these currencies will last. It’s clear that not all currencies are going to survive, much like any new industry, there will be those that occupy large portions of the marketplace.
Regardless of this, customers want to access cryptocurrency with some level of security. Many are using online exchanges to access the market, but investing through mainstream institutions is far more appealing—and mutually beneficial.
As the shift to mainstream adoption continues, the demand for access to crypto will force regulators to review legislation related to digital assets.
