U.S. Bank Rushes to Offer Crypto Custodial Services After the SEC Confirms It Won’t Ban Crypto
Traditional banking institutions are rushing to offer cryptocurrency custodial service amid high demand from institutional clients. On Tuesday, October 5, U.S. Bank - the fifth-largest retail bank in America - said that it will offer crypto custodial services to managers.
With this, U.S. Bank will be working with crypto-custodian NYDIG thereby offering its fund managers an option to store the private keys for Bitcoin, Litecoin, and Bitcoin Cash. Gunjan Kedia, the vice chair of the bank’s wealth management and investment services division told CNBC that they will soon start offering support for Ethereum as well.
U.S. Bank is not the forts to provide crypto custodial solutions to its clients. Other banking institutions like Northern Trust, State Street, and Bank of New York Mellon have already announced to custody digital assets.
During his interview with CNBC, Kedia said: “Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class. I don’t believe there’s a single asset manager that isn’t thinking about it right now.”
Kedia further said that the interest in crypto was broad and not specifically limited to niche players. “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 said.
Some of the bank’s clients already have positions in Bitcoin while other have been waiting for the custody to open. On the other hand, the Bank of America (BofA) released its first crypto report titled “Digital Assets Primer: Only the first inning.”
The report notes: “Companies aren't taking the risk of ignoring digital assets and applications and are actively exploring this new technology and its use cases. Despite regulatory headwinds, we are bullish on the prospects for digital assets as it enters the mainstream. We anticipate significant growth as use cases move beyond BTC’s store of value thesis to an industry characterized by product innovation.”
The recent reports from both these banks just at a time when SEC chairman Gary Gensler confirmed that the securities regulator won’t be banning cryptocurrencies, however, the Congress could. He stated that prohibiting crypto doesn’t fall within SEC’s mandate. “That would be up to Congress,” he added.
“It's a matter of how we get this field within the investor consumer protection that we have and also working with bank regulators and others — how do we ensure that the Treasury department has it within anti-money laundering, tax compliance. “Many of these tokens do meet the test of being an investment contract, or a note, or a security,” he added. He added that the regulator is specifically concerned regarding the financial stability issues relating to stablecoins.