U.S. Bancorp’s Cryptocurrency Custody Services
U.S. Bancorp, the parent company of U.S. Bank, has observed a resurgence in its institutional cryptocurrency custody offerings, a trend attributed to the more crypto-friendly policies of the Trump administration, according to CEO Gunjan Kedia. Speaking at the Morgan Stanley U.S. Financials Conference, Kedia noted that although the bank’s crypto custody service, launched in 2021, struggled during the Biden administration due to a challenging regulatory environment, renewed interest is now evident.
Regulatory Landscape and Institutional Hesitation
Kedia remarked that the initial hesitation from institutional clients stemmed from the uncertainties surrounding the regulatory landscape for cryptocurrencies at that time. She expressed confidence that the custody service is now primed for growth, stating:
“The product didn’t really take off because the regulatory regime at that point was very uncertain for large institutional investors. That product is back, and we are very able to provide it.”
The Biden administration’s Securities and Exchange Commission (SEC) has been active in enforcing stricter regulations on cryptocurrency activities, leading to diminished enthusiasm among institutional investors towards crypto ventures. In contrast, the previous Trump administration eased some of these regulatory pressures, which may have contributed to the renewed interest in crypto custody services as it seeks to cater to this segment of the market.
Future of Stablecoins and U.S. Bancorp’s Role
Kedia also highlighted that U.S. Bancorp is closely monitoring developments in the stablecoin sector as it considers its future role. She explained, “There’s a bigger conversation right now about payments with stablecoins, which we are studying and watching.” The bank is exploring the possibility of developing its own stablecoin and forming partnerships to support the initiative, noting that several pilot projects are underway.
Furthermore, Kedia mentioned that U.S. Bancorp could serve as a facilitator for stablecoin infrastructure, potentially managing the underlying assets and providing services such as escrow. She acknowledged that significant questions remain about how these offerings will be structured and that much depends on forthcoming regulations, such as those proposed in the GENIUS Act, which aims to establish guidelines for stablecoin issuers. This act recently received support from the U.S. Senate, signaling a potential shift in the regulatory framework surrounding stablecoins.
Conclusion
Despite the apparent volume of activity around stablecoins, Kedia pointed out a crucial distinction: approximately 90% of stablecoin transactions currently occur in a cryptocurrency-to-cryptocurrency context. This highlights the need for further clarity and exploration of real-world applications. She concluded:
“There’s a lot to be sorted out before the role we play solidifies in our mind.”
This indicates that U.S. Bancorp’s approach will evolve alongside the regulatory landscape and market demands.
