Bitcoin News Today: Big Banks Storm Crypto Vaults as Rules Shift

U.S. Bancorp has relaunched its institutional Bitcoin custody service, marking a return to the digital asset space after a multi-year pause. The move follows the repeal of a Trump-era regulatory guidance that had previously constrained banks from offering such services without holding significant capital. The service is now aimed at institutional investment managers and exchange-traded fund (ETF) providers, reflecting growing institutional demand for Bitcoin-related investment vehicles. U.S. Bank’s custody offering involves safeguarding Bitcoin on behalf of clients, with the crypto firm NYDIG acting as the sub-custodian, while U.S. Bank serves as the client-facing intermediary [1]. Stephen Philipson, head of wealth, corporate, commercial, and institutional banking at U.S. Bank, emphasized that having a bank-backed provider offers clients “a lot of comfort in an evolving part of the market” [1].

The initial pause of U.S. Bank’s custody service occurred in early 2022, when the U.S. Securities and Exchange Commission issued an accounting bulletin that made it capital-intensive for banks to hold crypto tokens. This guidance was rescinded earlier this year, prompting a wave of interest among traditional financial institutions in expanding their offerings into the crypto space. Citigroup, for example, has also indicated it is exploring custody services for digital assets that underpin crypto-related investment products [1].

The renewed interest from banks comes amid a surge in popularity of spot Bitcoin ETFs. Over a dozen asset managers have launched such products since the U.S. Securities and Exchange Commission approved them in January. The largest of these is BlackRock’s iShares Bitcoin Trust, which has a market capitalization of more than $80 billion [1]. While crypto-native firms like Coinbase have dominated the custody market for these products—reportedly serving more than 80% of issuers—the recent regulatory shift has created opportunities for traditional banks to enter the space.

U.S. Bancorp’s reentry into the crypto custody market aligns with broader trends in the industry. BNY Mellon, for instance, launched a digital custody platform in 2022 to safeguard institutional clients’ Bitcoin and Ether holdings. In Europe, Deutsche Bank is preparing to launch a crypto custody service in 2026, in collaboration with Bitpanda, while Citigroup has signaled its intent to enter the U.S. market with custody and payment services. These developments indicate that banks are increasingly recognizing the potential of digital assets as a new revenue stream [2].

U.S. Bank plans to scale its custody service as demand grows and is exploring how digital assets can be integrated into other areas, including wealth management and consumer payments [2]. The bank initially launched its custody service in 2021 in partnership with NYDIG but suspended it due to regulatory constraints. With the recent rule change, U.S. Bank is now advancing with a renewed strategy.

U.S. Bancorp’s shares have risen by 1.44% year-to-date, reflecting investor optimism about the bank’s expansion into digital assets [2]. As banks continue to navigate the evolving regulatory environment, their growing presence in the crypto custody market is expected to reshape the industry landscape.

Source:

[1] Hannah Lang, "U.S. Bancorp revives institutional bitcoin custody service" (https://finance.yahoo.com/news/us-bancorp-revives-institutional-bitcoin-120523648.html)

[2] "US Bancorp reboots crypto custody after Trump-era rule..." (https://cointelegraph.com/news/us-bancorp-bitcoin-custody-relaunch)