U.S.Bank Re-enters Bitcoin Custody Market,Targeting Institutional Investors
NEW YORK – U.S. Bank has reintroduced its bitcoin custody service for institutional investment managers, signaling a renewed confidence in the digital asset space following a period of regulatory uncertainty. The service, initially launched in 2021 adn paused in 2022, is now available again through a sub-custody partnership with NYDIG.
The revival comes as the market experiences a significant shift toward institutional investment in bitcoin, fueled by the recent approval and success of spot bitcoin Exchange Traded Funds (ETFs). U.S. Bank’s decision reflects growing clarity from regulators and increasing demand from its client base.
Previously suspended after a securities and Exchange Commission (SEC) bulletin increased capital requirements for banks holding client bitcoin, the service’s reinstatement was enabled by the recent rescission of Staff Accounting Bulletin 121 and related guidance from both the SEC and the office of the Comptroller of the Currency. “Those two pieces realy let us accelerate our reassuming of the service,” stated Laura Cote, U.S. Bank’s head of global fund services product.
The bank is already a major player in the ETF market, currently servicing 33 bitcoin funds administratively and supporting 15 funds employing digital asset strategies – representing 24% of all U.S.-listed ETFs, according to Cote. Spot bitcoin ETFs currently hold 6.16% of all bitcoin in existence, as tracked by bitbo.
U.S. Bank is deliberately focusing on institutional clients, responding to demand from this sector rather than pursuing retail investors. Manny institutions currently utilize firms like Coinbase for bitcoin custody, and U.S.Bank aims to provide a regulated option. NYDIG will continue to serve as the sub-custodian for client bitcoin holdings.
“Together, we can bridge the gap between customary finance and the modern economy by facilitating access for global Fund Services clients to bitcoin as sound money, delivered with the safety and security expected by regulated financial institutions,” said Tejas Shah, CEO of NYDIG.
The growth of spot bitcoin ETFs has driven a broader change, moving bitcoin from a largely retail-held asset to one with increasing institutional participation. The total market value of bitcoin held in ETFs now exceeds $144 billion, underscoring this evolving landscape.
