U.S. Bank has reignited its Bitcoin custody services aimed at institutional investment managers after a hiatus spurred by regulatory challenges. This revival underscores the bank’s commitment to positioning itself at the forefront of the evolving cryptocurrency landscape. Initially, U.S. Bank announced its entry into digital asset custody in 2021, but the rollout was halted in 2022 due to the Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 121, which imposed restrictions on banks holding digital assets.
In a recent statement, the bank confirmed that it would now provide Bitcoin custody services alongside support for exchange-traded funds that are based on the cryptocurrency. This significant move is targeted at institutional investment managers with registered or private funds. Notably, U.S. Bank plans to evaluate additional cryptocurrencies over time, contingent upon their alignment with the bank’s risk and compliance standards as well as client demand.
The resurgence of U.S. Bank’s crypto custody capabilities comes on the heels of a regulatory shift, as the Federal Reserve discontinued a supervisory program that had closely monitored financial institutions engaged in cryptocurrency activities. Over recent months, the regulatory environment has become increasingly favorable, particularly following actions from lawmakers aimed at fostering growth in the crypto sector.
Stephen Philipson, the vice chair of U.S. Bank Wealth, Corporate, Commercial, and Institutional Banking, expressed enthusiasm about the bank’s return to the cryptocurrency space. “We’re proud that we were one of the first banks to offer cryptocurrency custody for fund and institutional custody clients in 2021, and we’re excited to resume the service this year,” he said.
U.S. Bank’s partnership with fintech firm New York Digital Investment Group (NYDIG) will facilitate these custody services, including for Bitcoin exchange-traded funds (ETFs). With the SEC’s approval of spot Bitcoin ETFs last year, demand for such investment vehicles has surged, and U.S. Bank aims to cater to fund managers looking for both custody and administrative solutions.
As a major player in the banking industry, being the fifth largest in the United States by consolidated assets, U.S. Bank’s re-entry into the cryptocurrency realm signals a notable shift in the relationship between traditional banking and digital currencies. The bank has indicated a proactive approach in continually assessing the cryptocurrency market to expand its offerings while adhering to regulatory frameworks.
This development marks a pivotal moment for institutional engagement with cryptocurrencies, and U.S. Bank appears well-positioned to support investment managers navigating this dynamic and increasingly accepted sector.
