US Bank, the country’s fifth-largest lender, said it plans to resume cryptocurrency custody services as regulators adopt a more welcoming approach to digital assets.
The service will only be available for institutional investment managers with registered or private funds, Cincinnati-based US Bank said on Wednesday. It has partnered with NYDIG, a bitcoin and power company, to act as a sub-custodian.
Regulatory changes
Originally introduced in 2021, US Bank’s crypto custody was discontinued in 2022, after a regulatory update made the service less attractive to the business. In Staff Accounting Bulletin (SAB) 121, released by the Securities and Exchange Commission (SEC). In SAB 121, the regulator indicated an expectation that crypto assets would be recorded on the assets and liabilities balance sheet of the holding entity – a notable roadblock to crypto custody services.
SAB 121 notes that: “The obligations associated with [cryptocurrency custody services] involve unique risks and uncertainties not present in arrangements to safeguard assets that are not crypto-assets, including technological, legal, and regulatory risks and uncertainties.” The bulletin was rescinded earlier this year, when the SEC released SAB 122 on 23 Jan – one of the first acts of the pro-crypto Trump administration.
“We’re excited to resume the service this year,” said Stephen Philipson, vice chair, US Bank Wealth, Corporate, Commercial and Institutional Banking. “Following greater regulatory clarity, we’ve expanded our offering to include bitcoin ETFs.”
Digital bridge for TradFi
US Bank has more than $11.7 trillion in assets, and is intent upon expanding its crypto-related activities, according to the announcement. “Further expanding our capabilities unlocks new opportunities to deliver innovative solutions to those we serve,” said Dominic Venturo, senior executive vice president and chief digital officer at US Bank. He added “US Bank will continue to drive progress and shape the future of what matters for our clients in digital finance.”
Its partner, NYDIG, hopes that the custody services offered will help “bridge the gap between traditional finance and the modern economy.”
