It was inevitable that banks would be unable to resist entering the cryptocurrency space, and more of the biggest US banks are in it than you might think. So, who exactly is taking such a ‘risk’, as the US banking regulator put it?
It seems that Bank of New York Mellon was the first to enter the fray in February 2021 with its offer of holding, transferring and issuing Bitcoin for asset management clients. The clients will be able to store BTC and ETH in BNY Mellon wallets, which have been created in partnership with Fireblocks. The service hasn’t launched yet, but is expected this year.
Bancorp’s Bitcoin custody service went live in October 2021, with NYDIG, a Bitcoin company, acting as sub-custodian for the bank. And State Street Corp said in March this year that it intends to offer crypto custody services in partnership with infrastructure platform Copper.co. This, according to the bank, is subject to regulatory approval.
Deutsche Bank is planning to develop a service to hold and trade crypto for institutional investors, and has already completed a proof of concept, although it is keeping this move very quiet indeed. Similarly, BNP Paribas has also completed a proof of concept with wallet provider Curv. The plan is to develop a secure method to transfer tokenised securities.
Wealth Management Clients
Banks have been rushing to offer their wealth management clients exposure to crypto, starting back in 2021. Morgan Stanley is the pack leader, according to CNBC. It reported in March this year that Morgan Stanley is enabling access to three Bitcoin funds for clients with at least $2 million in assets held at the bank.
JPMorgan Chase is allowing its financial advisers to accept buy/sell orders for five crypto products from its wealth management clients, and Wells Fargo has been offering something similar since 2021. Indeed, both JPMorgan and Wells Fargo have registered private Bitcoin funds with NYDIG.
Citigroup now has a digital assets group, and Goldman Sachs is offering wealthy clients access to an Ethereum fund via Galaxy Digital.
Trading and Research
You will find the same names in trading. Goldman rebooted its crypto trading desk in March 2021, and in March this year became the first US bank to carry out an over-the-counter crypto trade in partnership with Galaxy Digital.
The big banks are also putting a lot of money into research, particularly Bank of America, Citicorp and Morgan Stanley, with all of them creating new departments and opening up new job roles.
And there you have it – big banks aren’t really as crypto-averse as you might have thought.