US Bancorp Resumes Bitcoin Custody Service

• US Bancorp is reintroducing its Bitcoin custody services.
• The bank is partnering with NYDIG.
• This restart follows a three-year pause due to regulatory concerns.

US Bancorp announced on Wednesday that they are reviving their Bitcoin management services. The decision comes after changes in regulatory guidance from the Biden administration, which indicated that banks should report crypto-related assets as liabilities.

The Minneapolis-based bank is now targeting institutional investment managers, especially those with registered or private funds, who are looking for secure storage solutions for Bitcoin. In earlier iterations of their service, US Bancorp worked as a Bitcoin subcustodian with NYDIG, but now they aim to act as a client intermediary.

With this new rollout, US Bancorp has expanded its offerings to include Bitcoin exchange-traded funds. This approach allows them to provide comprehensive custody and administrative services for fund managers.

The bank’s choice to resume these services probably reflects a broader trend, as the current political climate appears more welcoming to the crypto industry. In July, the Genius Act was passed in Congress, creating a clear regulatory framework, and President Trump signed it into law. This legislative move seemed to encourage more involvement from banks, like Bank of America and Citigroup, who are exploring their own digital currency products.

The regulatory landscape has shifted significantly since the Biden administration emphasized caution with investments in digital assets. US Bancorp had initially launched its Bitcoin management service in 2021, responding to a growing client demand. However, they halted these services less than a year later when the Securities and Exchange Commission issued guidance that classified cryptocurrencies held in custody as on-balance sheet liabilities, complicating capital requirements.

Fortunately for US Bancorp, that SEC guidance was recently repealed. As a result, the bank is now looking further into what crypto-related services it can offer in this new environment.

Just before the passage of the Genius Act, CEO Gunjan Kedia mentioned to analysts that the company was considering integrating stablecoins into their payment operations.

Kedia indicated enthusiasm for exploring their own stablecoin, saying, “I’m ready to pilot it.” That said, she tempered expectations, suggesting that any major impacts on revenue may not manifest immediately as there are still technical and structural challenges to address.

With around $686 billion in assets, US Bancorp is in a strong position within the financial sector, managing over $11.7 trillion in various forms of wealth and institutional assets.