US Bank Resumes Bitcoin Storage Operations Following Multi-Year Hiatus

After a brief pause due to regulatory uncertainty, U.S. Bank, the fifth largest bank in the United States by assets, has resumed offering Bitcoin custody services. This move marks a significant step forward in the mainstream adoption of cryptocurrency by traditional financial institutions.

The decision to allow U.S. Bank to offer Bitcoin custody services was made by the Federal Reserve on March 29, 2023. This follows the rescinding of the Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 121 bill in January, which previously prevented banks from custodying digital assets.

U.S. Bank's expanded offering now includes custody for Bitcoin Exchange-Traded Funds (ETFs). The bank is working with fintech New York Digital Investment Group (NYDIG) to offer the service. Stephen Philipson, vice chair of U.S. Bank Wealth, Corporate, Commercial and Institutional Banking, stated that the bank is excited to resume the service this year.

Philipson also mentioned that the bank would focus on custodying Bitcoin for exchange-traded funds. However, U.S. Bank may add additional coins for custody if they meet the bank's standards. The specific altcoins that U.S. Bank will offer custody for in the future have not been specified.

The resumption of the service comes at a time when regulations around the crypto space have loosened since President Donald Trump took office in January. Fund managers issuing Bitcoin ETFs have mostly used Coinbase, America's largest crypto exchange, to custody the digital coins. With U.S. Bank entering the scene, institutional investment managers with registered or private funds now have another option for secure digital asset custody.

This move by U.S. Bank is a significant one, as it indicates a growing acceptance of cryptocurrency by traditional financial institutions. U.S. Bank's expanded offering includes support for Bitcoin ETFs, a product that was approved by the SEC last year. Trump himself has also invested in crypto through various digital-asset ventures.

The Federal Reserve has ended its supervisory program that monitored banks involved in crypto. This, coupled with the resumption of U.S. Bank's Bitcoin custody service, suggests a positive shift in the regulatory landscape for cryptocurrency.

As U.S. Bank continues to evaluate coins for custody based on risk factors, compliance, and client demand, it will be interesting to see which altcoins they choose to add to their offering in the future. For now, the focus remains on Bitcoin, but the potential for further expansion is certainly there.

In conclusion, the resumption of U.S. Bank's Bitcoin custody service is a positive development for the cryptocurrency industry. It signifies a growing acceptance of digital assets by traditional financial institutions and could pave the way for increased mainstream adoption of cryptocurrency.