As institutional interest in cryptocurrencies continues to surge, the popular American bank, U.S. Bank, has launched a custodial service for selected digital currencies.
CNBC reported today that the bank will partner with New York Digital Investment Group (NYDIG) for the initiative, and will allow hedge fund managers to store private keys to their Bitcoin (BTC), Bitcoin Cash (BCH), and Litecoin (LTC).
The report suggests that the fifth-largest United States bank also plans on adding support for other cryptocurrencies soon.
U.S. Bank’s cryptocurrency custody service will only be available to institutional managers who have private funds in the United States or Cayman Island to allow the bank to easily verify the origin of the assets in line with anti-money laundering (AML) requirements.
Founded in 1863, U.S. Bank is currently ranked the fifth-largest bank in the United States with more than $8.6 trillion in assets under management (AUM).
Gunjan Kedia, vice chairman of the bank’s Wealth Management and Investment Services unit, said the U.S. bank is launching crypto custodial services as its clients have continued to indicate interest in holding cryptocurrencies as a diversified asset class.
According to Kedia, after U.S. traditional financial institutions got the green light last year to custody cryptocurrencies, U.S. Bank conducted a survey to determine if their clients were interested in the assets.
Interestingly, the bank found out that customers’ interests in cryptocurrencies were broader than they had always imagined and not limited to niche players, the report added.
U.S. bank’s intention to provide custodial services for digital currencies goes on to show that traditional financial institutions, which once publicly frowned against cryptocurrencies, are now left with no option but to embrace the assets.
The growth of cryptocurrencies has prompted several traditional financial institutions to take early positions in the unending opportunities of the assets, by offering various crypto-related services.
Earlier this year, U.S. banks like BNY Mellon, State Street, and Northern Trust also indicated plans to offer cryptocurrency custodial services.
Reacting to the development, Kedia said,
“I don’t believe there’s a single asset manager that isn’t thinking about it [cryptocurrency] right now.”
Cryptocurrency adoption has surged tremendously this year, with interest in fiats declining rapidly due to economic challenges ushered in by the coronavirus pandemic.
Many financial experts have predicted that fiats may not survive a more challenging financial crisis, while cryptocurrencies could weather the storm.
“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,” Kedia added.
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