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US Bank Launches Cryptocurrency Custody Services Amid Strong Demand From Institutional Clients

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U.S. Bank, the fifth-biggest retail bank in the nation announced on Tuesday that its cryptocurrency custody service is available to fund managers.

The offering will help investment managers store private keys for bitcoin, bitcoin cash and litecoin with assistance from sub-custodian NYDIG, according to Gunjan Kedia, vice-chair of the bank’s wealth management and investment services division. Support for other coins like ethereum is expected over time, Kedia said.

According to CNBC reports, this move is the latest sign that established financial players are beginning to accept cryptocurrencies as a legitimate asset class. In the realm of custody banks, which verify and safeguard trillions of dollars of traditional assets for money managers, major players including Bank of New York Mellon, State Street and Northern Trust have all announced plans to custody digital assets.

“Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class,” Kedia said in an interview. “I don’t believe there’s a single asset manager that isn’t thinking about it right now.”

U.S. Bank, which was founded during the Civil War in 1863, is a top 10 player in custody with more than $8.6 trillion in assets under custody and administration, according to data from the Federal Deposit Insurance Corp.

After a key regulator released a paper last year which established that national banks could have custody of crypto assets, Kedia surveyed the firm’s biggest clients to determine if their interest was genuine. She found that interest in crypto was broad and not limited to niche players and that clients wanted the bank to move quickly.

“What we were hearing across the board, is that while every currency might not survive – there may not be room for thousands of coins— 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,” she said.

Some investment clients already have positions in bitcoin, while others are waiting for custody services to begin, she said. U.S. Bank is one of the first institutions to have a live custody product available, Kedia said.

The price of bitcoin has whipsawed this year, surging to an all-time high of about $64,000 in April before losing half its value the next month. But the original cryptocurrency has proven to be resilient: It has weathered China’s move to ban the digital currency last month, and early Tuesday hit $50,000 once again.

There is irony in the fact that while bitcoin was created to cut out financial middlemen, swaths of the old financial order are being recreated to cater to digital currencies. After all, fund managers could choose to store their own cryptocurrency keys. But managers want the imprimatur of established names like U.S. Bank to help allay concerns from their own clients, Kedia said.

In order to onboard a manager into the crypto product, U.S. Bank has to trace the origin of the client’s funds in the industry’s standard anti-money laundering and “Know Your Client” checks, she said.

The product is only for institutional managers with private funds in the U.S. or Cayman Islands, according to the bank. But if and when the U.S. Securities and Exchange Commission approves a bitcoin ETF, demand is expected to rise.

“We have a lot of funds who are hoping to invest in ETFs,” Kedia said. “Some literally want custody contracts signed the day the SEC approves an ETF.”

U.S. Bank first established its Blockchain and Cryptocurrency Practice in 2015, when the price of bitcoin was less than $200. The price of BTC is hovering around $51K at the time of writing.

The bank announced the launch of three cryptocurrency offerings in April to meet the “growing needs of clients.” The first was the custody service which is now live. The second was an investment in Securrency, a developer of institutional-grade blockchain-based financial and regulatory technology. The third was that U.S. Bank had been selected to administer NYDIG’s ETF bitcoin fund this year, pending regulatory approvals.

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Bitcoin

Bitcoin´s New All-time High Underscores its Mainstream Value

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Bitcoin is undeniably a mainstream asset class and most investors should consider including crypto assets as part of a diversified portfolio, asserts the boss of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The bullish observation from Nigel Green, CEO and founder of deVere Group, which has $12bn under advisement, comes as the world’s dominant cryptocurrency hits a new all-time high of more than $66,000 on Wednesday.

Mr Green notes: “In July, we publicly predicted that Bitcoin would reach and most likely beat it’s previous all-time highs.

“I am confident that whilst there might be some profit-taking in the near-term, so that investors can accumulate more later, the momentum is such that we can expect prices to continue on their upward trajectory.”

He continues: “This fresh all-time high deniably cements Bitcoin as a mainstream asset class.  I believe that most investors should consider including crypto assets as part of a diversified portfolio.

“Why? Because crypto is the inevitable future of money and there is clearly going to be advantages for those investors who have exposure early on – in the same way as those who invested in the major internet, online and tech successes back in the day, such as Amazon, Google and Apple, have secured enormous returns.”

Wednesday´s price highs come as the ProShares Bitcoin Strategy ETF – the first of its kind – launched on the New York Stock Exchange on Tuesday at the opening bell.

The deVere CEO says there are there are five main factors that will secure the longer-term upward price trajectory.

“First is the U.S. Federal Reserve saying it has no intention of banning cryptocurrencies. It’s highly probable that other cryptocurrencies will have more stringent regulatory oversight, yet Bitcoin could be viewed differently by authorities partly due to its gold-like status,” he observes.

“Second is the ongoing, mounting interest from institutional investors including Wall Street giants and major payments companies, who bring their capital, expertise and reputational influence to the market.

“Third, is the rising number of crypto advocates and mega influencers like Elon Musk, Jack Dorsey and Cathie Wood who have a clear message: crypto is the inevitable future of money.”

Fourth, the technicals back the prediction. Looking at Bitcoin halving events, over time we’ve seen that values rise substantially in the year after a halving. After the 2012 and 2016 Bitcoin halvings, prices increased by 55 times and 15 times respectively.

“And fifth, cryptocurrencies – Bitcoin in particular – have changed the way the world handles money, does business, makes transactions and manages assets. Investors appreciate the intrinsic value of digital, borderless, global currencies for trade and commerce purposes in increasingly digitalised economies in which businesses operate in more than one jurisdiction.”

He goes on to say: “This will only increase as mass global adoption increases. Only last month El Salvador became the first country in the world to adopt Bitcoin as legal tender, and I’m certain many others will follow suit.”

Mr Green concludes: “Today is a major milestone.  It underscores crypto´s mainstream appeal and galvanises its place in the global financial system.”

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Cryptocurrency

3 Largest Cryptocurrencies Account for Almost 70% of All Crypto Market’s Value

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The cryptocurrency sector has in the recent past witnessed a surge in the number of new coins joining the market amid rising value. However, despite hundreds of different coins existing, only a few established digital currencies are dominating the market.

According to data compiled by Finbold, the top three largest cryptocurrencies (just 0.02% of all 12,917 coins) by market capitalization account for 68.73% of the total cryptocurrency market of $2.53 trillion as of October 20, 2021.

Bitcoin has the largest share at 47.6%  or $1.2 trillion, followed by Ethereum at 17.93% or $454.76 billion. Binance Coin (BNB) takes the third spot at 3.2%.

Cardano (ADA) and Tether (USDT) round out the top five cryptocurrencies with a market share of 2.76% and 2.72%, respectively.

Crypto market heading in the right direction 

The domination by the three cryptocurrencies highlights the recent rise of the market that has witnessed an increase in both retail and institutional investors. The market has also recorded an introduction of new investment products: According to the research report:

“To summarize, many trade experts believe that the cryptocurrency market is now trending in a positive direction. The introduction of spot ETFs in line with suitable regulatory frameworks may aid the industry in gaining considerable momentum in the future.”

As the maiden cryptocurrency, Bitcoin holds the top spot in the market cap, with the assets receiving approvals from different players. The asset’s rise has led to proponents considering it as a hedge against inflation.

In the future, the asset is likely to expand its dominance in the market, especially with the emergence of new related investment products like the Bitcoin ETF.

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Bitcoin

Bitcoin Price Just 1% Off All-time High: Will this Trigger a Sell-off?

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Long-term Bitcoin holders will begin to realise some profits amid near all-time price highs, but we expect values to continue to rise due to more active market participants, predicts the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The prediction from Nigel Green, chief executive and founder of deVere Group, comes as the world’s dominant cryptocurrency was less than 1% off its all-time high of $64,888.

The price highs come as the ProShares Bitcoin Strategy ETF – the first of its kind – launched on the New York Stock Exchange on Tuesday at the opening bell.

Mr Green says: “The Bitcoin price has gained around 35% since mid-September as interest around the first SEC-approved Bitcoin ETF has grown.

“It’s been seen as a major test to see if mainstream investors are ready to include cryptocurrencies in their portfolios alongside other assets such as stocks and bonds – and it appears, judging by the reaction, that they are.”

He continues: “This will continue to drive not only Bitcoin but the wider digital assets sector, therby encouraging more ETFs, amongst other crypto vehicles, to be brought to market.

“This will inevitably bring in a growing number and broader range of active market participants, including those using pension funds, and retirement and brokerage accounts.

“The growing interest in and demand for crypto will help maintain the upward trajectory of Bitcoin and other digital currencies in the near term.”

In September, he forecast that the Bitcoin price would be back to its previous highs by the end of this year. This is already now almost proven to be an accurate prediction but, he says, the momentum will drive them further still.

Yet despite the growing number of active market participants which, as Nigel Green says, “as history teaches us, have matched with increasing interest in the digital asset in early stages of bull markets,” some long-term Bitcoin holders might “begin to realise profits.”

He notes: “Long-term holders typically buy in a bear market and sell in a bull run.  They are spurred into realising some profits when the price is close to or breaks the previous all-time high.

“As such, we can expect to see some long-term holders now cashing in some Bitcoin with a view to accumulating more later.”

However, the deVere CEO concludes that any long-term holders’ selling is “likely to be balanced by growing activity by new investors” and that therefore “the price momentum should be sustained.”

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