The financial institution joins others interested in entering the custody of digital assets in the U.S.
US Bank and NYDIG Partner to Offer Crypto Custody. The US Bank partnered with Bitcoin services leader NYDIG and launched a Bitcoin custody service for its institutional clients, the US fifth-largest commercial bank.
NYDIG is proud to help power the launch of @usbank‘s #Bitcoin custody service. As the nation’s fifth-largest retail bank, this move is a significant sign that banks and customers alike are beginning to accept bitcoin as a legitimate asset class. https://t.co/JipaV9RMHd
— NYDIG (@NYDIG) October 5, 2021
The service will help store private keys for Bitcoin, Bitcoin Cash, and Litecoin. Gunjan Kedia expects other currencies, such as Ethereum, to be supported later, vice president of US Bank’s investment services and wealth management division. For the time being, this service will be available to its institutional clients in the United States and The Cayman Islands.
Many financial institutions consider Bitcoin and other cryptocurrencies as legitimate securities and money, giving the impression that they are here to stay. There is a kind of competition among banks to see who serves their clients better regarding crypto assets. The Northern Trust (NTRS), Bank of New York Mellon (BK), and State Street Bank (STT) have also expressed interest in the custody of digital assets.
The US Bank specializes in the custody of traditional assets and this new foray into Bitcoin. According to the Yahoo article:
US Bank Wealth Management and Investment Services have more than $8.6 trillion in assets under custody and management and $282 billion in assets under management globally as of June 30, 2021. In addition to offering alternative investments, fund custody, and fund administration services, it also provides asset management products and services, custody and corporate trust services, and wealth management services.
Last May, hundreds of banks have shown interest in the NYDIG program. Retail banks are the financial entities mainly accepting services from NYDIG and FIS. One of the banks named on that occasion was Suncrest, a small California-based bank.
The SEC won’t ban crypto
The chairman of the U.S. Securities and Exchange Commission, Gary Gensler, in an appearance before Congress on Tuesday, October 5, asserted to Congressman Ted Budd that there are no plans to ban cryptocurrencies in the United States.
As he had done days earlier with Federal Reserve Chairman Jerome Powell, Congressman Ted Budd asked Gensler if, as in China, the SEC would ban cryptocurrencies and promote any central bank digital currency (CBDC). The SEC Chairman responded: “No, that would be up to Congress.”
The emphasis on asking authorities whether or not to ban Bitcoin and other cryptocurrencies comes amid a context in which members of Congress want to know how they can regulate the industry, exchanges, and decentralized finance (DeFi). Some DeFi platforms, such as 1inch, are already preparing for regulations in the United States.
Gensler expressed the need for decentralized exchanges to register with the SEC and regulate stablecoins. And reiterating that most cryptocurrencies fall under the definition of “securities.” According to Gary Gensler:
Even in decentralized platforms, so-called DeFi platforms, there is a centralized protocol. And while they don’t take custody in the same way (as centralized exchanges), I think those are the places where we can get the maximum amount of public policy.
Gensler’s statements are consistent with his thoughts weeks ago on the need to regulate the crypto industry. In particular, he perceives stablecoins as “casino chips” and represent a systemic economic risk.