What happened
One of the largest banks in the country is launching cryptocurrency custody services. The news helped to drive the price of Bitcoin (BTC 1.49%) up 5% to over $51,000 on Tuesday.
So what
U.S. Bank, a subsidiary of financial giant U.S. Bancorp (USB 0.32%) with over $8.6 trillion in assets under custody and administration, wants to help institutional investors safeguard their crypto assets. It will work with NYDIG, a leading Bitcoin technology and financial services provider, to do so.
"NYDIG is excited to partner with U.S. Bank to provide its customers with a custody solution that meets the highest security, compliance and regulatory standards," NYDIG CEO Robert Gutmann said in a press release.
Image source: Getty Images.
Interest in cryptocurrencies is growing among fund managers and other professional investors. U.S. Bank, in turn, is moving to supply its customers with the services they're demanding.
"Our clients are getting very serious about the potential of cryptocurrency as a diversified asset class," U.S. Bank executive Gunjan Kedia said during an interview with CNBC. "I don't believe there's a single asset manager that isn't thinking about it right now."
Now what
Custodians provide an additional layer of protection for investors. They hold financial assets and provide security features designed to reduce the risk of loss via theft or other nefarious actions. In the case of digital assets, U.S. Bank will help investors safeguard their private keys for Bitcoin and other cryptocurrencies.
Many financial institutions are required to use custodians to protect their customers' assets. U.S. Bank's new crypto custody services could thus make it easier for more investment funds to allocate their clients' capital to this nascent asset class.
