U.S. Bank has made a significant move by reinstating its bitcoin custody service aimed at institutional investment managers, following a pause in 2022 that was caused by regulatory uncertainties. This service, initially launched in 2021, has found new life through a partnership with NYDIG, which will act as the sub-custodian.
The decision to relaunch comes after the recent clarification of regulatory guidelines. The bank’s previous suspension was influenced by a Securities and Exchange Commission (SEC) bulletin that imposed stricter capital requirements for banks holding client bitcoin. However, the recent rescission of Staff Accounting Bulletin 121, along with other related guidance from the SEC and the Office of the Comptroller of the Currency, has paved the way for banks to once again engage in these activities.
Laura Cote, the head of global fund services product at U.S. Bank, highlighted that these developments allowed the institution to swiftly resume its custody services.
The resurgence of U.S. Bank’s custody offering aligns with the growth of the exchange-traded fund (ETF) market. Since the introduction of spot bitcoin ETFs in early 2024, the bank has reported substantial expansion in its ETF operations—currently managing 33 bitcoin funds and providing administrative support to 15 funds that employ digital asset strategies. According to Cote, U.S. Bank now services 24% of all U.S.-listed ETFs.
A noteworthy statistic reveals that U.S. spot bitcoin ETFs currently hold approximately 6.16% of the total bitcoin in existence, as observed by Bitbo.
The focus of U.S. Bank’s custody services remains firmly on institutional clients, a strategy shaped by client demand rather than interest from retail investors. Many institutions have traditionally secured their bitcoin with platforms such as Coinbase, but U.S. Bank is positioning itself as a regulated alternative. NYDIG will continue to handle the sub-custody of client bitcoin holdings, as it did in the previous version of the service.
Tejas Shah, CEO of NYDIG, emphasized the partnership’s potential, stating that it aims to bridge the gap between traditional finance and the evolving digital economy, providing Global Fund Services clients with access to bitcoin while ensuring the necessary safety and security that regulated financial institutions are expected to offer.
This revitalization of bitcoin custody services mirrors a broader trend within the digital asset landscape, as evidenced by the increased market value of ETF bitcoin holdings, which now surpasses $144 billion. This surge indicates a notable shift from bitcoin being primarily a retail-held asset to a growing presence in the institutional realm.
