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U.S. Bancorp (USB) Unveils Cryptocurrency Custody Services

U.S. Bancorp (USB) is exploring the cryptocurrency custody service arena, courtesy of clients' heightening interest and demand from its fund services clients for the same.

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This story originally appeared on Zacks

U.S. Bancorp’s USB primary subsidiary, U.S. Bank, foraying into the cryptocurrency arena, is garnering custody access to its Global Fund Services clients. It has launched a cryptocurrency custody service for institutional investment managers having private funds in the Cayman Islands and the United States, who would fancy a safe solution for their Bitcoins.

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The offering is being made in partnership with bitcoin powerhouse New York Digital Investment Group (NYDIG). NYDIG is a subsidiary of alternative asset manager, Stone Ridge. It provides an institutional-grade platform for secure custody, execution, asset management and more.

Gunjan Kedia, vice chair, U.S. Bank Wealth Management and Investment Services, said, "The environment is complex, with an evolving regulatory landscape and nascent technology platforms. Our clients are looking for a service offering that is consistent with U.S. Bank’s exceptional standards of quality and risk management. Integrity and expertise are critical to safeguarding our clients’ most valuable assets, so we’re thrilled to offer our institutional clients NYDIG’s industry-leading Bitcoin expertise, backed by the financial strength of U.S. Bank."

"NYDIG is excited to partner with U.S. Bank to provide its customers with a custody solution that meets the highest security, compliance and regulatory standards," said Robert Gutmann, co-founder and CEO of NYDIG.

By joining forces, both companies can provide access to this budding asset class, while also delivering the best-in-class experience expected by U.S. Bank’s clients.

Our Take

Until July 2020, the Office of the Comptroller of the Currency did not grant permission to banks to hold cryptocurrencies. The amendment post July gave banks the go-ahead to begin exploring cryptocurrency operations.

Thus, such an effort by the bank will likely boost the world’s most popular cryptocurrency asset’s prospects further, at least on the grounds that U.S. Bancorp is enabling cryptocurrency access to its clients.

The bank’s move follows its peer JPMorgan’s JPM endeavor in August 2021 to offer its Private Bank wealth management customers access to an in-house passively-managed bitcoin fund. Citigroup Inc. C is also considering to offer bitcoin futures trading for some institutional clients.

Goldman Sachs GS had launched trading with non-deliverable forwards, i.e. derivatives tied to Bitcoin’s price, being cash-settled. The company will also shield itself from the cryptocurrency’s fluctuations by trading Bitcoin futures in block trades on CME Group Inc., with Cumberland DRW as its trading partner.

Shares of U.S. Bancorp have gained 7.9% in the past six months, while the industry has rallied 7.7%.

Zacks Investment ResearchImage Source: Zacks Investment Research

The stock presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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