U.S. Bank Announces Bitcoin Custody Service

Key Takeaways

  • U.S. Bank will make cryptocurrency custodial services available to investment managers, according to CNBC.
  • U.S. Bank is not the first major player to make such a move.
  • The decision would suggest that institutional interest in cryptocurrency is continuing to grow.

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U.S. Bank, the fifth largest retail bank in the United States, announced its Bitcoin custody service in a press release today.

Big Banks Open to Crypto Custody Service

U.S. Bank, which currently has custody of $8.6 trillion in assets, will initially make custody services available for Bitcoin.

Custody services for Bitcoin Cash, Litecoin, Ethereum and other assets will likely come over time, according to the vice chair of U.S. Bank’s wealth management and investment services division, Gunjan Kedia.

This move would suggest that deeply entrenched U.S. financial institutions and their clients are becoming increasingly interested in cryptocurrencies. In an interview, Kedia said, “Our clients are getting very serious about the potential of cryptocurrencies as a diversified asset class…I don’t believe there’s a single asset manager that isn’t thinking about it right now.”

While fund managers could buy digital assets themselves (and therefore have to store their own private keys), many want the legacy financial institutions that already safeguard trillions in assets to secure their crypto assets for them.

The service will be offered in partnership with NYDIG, a Bitcoin subsidiary of Stone Ridge Asset Management.

Other Banks Also Offer Crypto Services

Other large banks have already made similar moves, seemingly back-to-back. In February, BNY Mellon announced that it would offer its clients Bitcoin custody. Roman Regelman, BNY’s CEO of Asset Servicing and Head of Digital, acknowledged that “digital assets are becoming part of the mainstream.”

In March, within days of Morgan Stanley announcing three different funds with which its clients could attain Bitcoin exposure, Goldman Sachs announced it would be launching a “full spectrum” of investment products in digital assets. Mary Rich, Goldman’s VP of Digital Assets, said the prospect of blockchain being the “dawn of new Internet”as well as the desire for a hedge against inflationmight explain their clients’ interest.

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Moreover, State Street announced in April their own cryptocurrency trading platform with a “smart custody routing program.” Later that month, JP Morgan made an announcement for its own Bitcoin fund along with custodial services. 

As of May, hundreds of banks across the U.S. had already enrolled in the New York Digital Investment Group’s (NYDIG) crypto custody program. The president of NYDIG, Yan Zhao, has warned that banks will lose customers to newer companies like Coinbase, Square, Paypal, and Robinhood if they do not provide crypto services.

 An August survey of U.K. institutional investors and wealth managers found that nearly three quarters sought to increase crypto exposure between now and 2023, and some big banks are now rolling out critical infrastructure to make it easier for institutions to do so.

Disclaimer: The author of this piece owned BTC, ETH, and several other cryptocurrencies at the time of writing.

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Publicly-Traded Security Provider Prosegur Launches Prosegur Crypto Custody Arm

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Prosegur is launching a crypto custody arm.

Prosegur Announces Crypto Bunker 

Prosegur, a publicly traded company providing advanced physical and cyber security services, is launching its Prosegur Crypto arm to offer a powerful solution for professional cryptocurrency custody.

The company aims to take its multi-decade experience in cybersecurity to the crypto world by launching the Crypto Bunker©, a multi-layer defense-in-depth mechanism that protects customer funds from both digital and physical tampering methods.

The Crypto Bunker is based on a “360° Inaccessibility Approach” that incorporates over 100 protection measures in 6 integrated security layers of 2 unreachable environments: The cold storage and the cold space.

The core of the custody mechanism is the 100% offline-based storage and transaction signing process, which uses an air-gapped Hardware Security Module (HSM) to hold the private keys. Using a unique outbound-only network interface, the HSM can be used to move funds out of the wallet without an internet connection. To sign transactions for the wallet, a secure Multi-Party Computation (MPC) system distributes the private key shares to up to 15 co-signers, ensuring that there is no single point of failure. Finally, user authentication combines secure OTP solutions, passwords, biometric data and geolocation with an IP address whitelisting process, resulting in a secure multi-step authentication process. The system is offered in partnership with GK8, a leading crypto security solutions provider.

In terms of physical security, Prosegur Crypto’s facilities feature 24/7 surveillance, armored storage, and specific protocols to prevent physical extortion and robbery, both by outsiders and insiders. Employees of the facilities are subjected to periodic criminal and credit background checks, in addition to biometric checks and segregated tiers of management access to ensure no employee is able to game the system. Finally, the internal communication systems are secured by all types of advanced cyber threats, including DDOS attacks and Corporate Network System intrusion, with attestations from all the relevant certifications.

The physical defense mechanism is the result of decades of know-how acquired by Prosegur, which secures $400 billion in assets under custody. Offering many types of security services spread between various branches, including home security and cash-in-transit protection, Prosegur is a market leader in physical and cyber security products.

Raimundo Castilla, the CEO of Prosegur Crypto, said of the update:

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“We’re now ready to unveil our revolutionary crypto custody solution, probably the most advanced and comprehensive on the market. The combination of bank-level physical security and new generation cold storage technology means that Prosegur Crypto is the safest place to store crypto assets for institutions, businesses, and any other entity requiring secure cold storage. With security, trying to reinvent the wheel is never worth it, and anyone who goes through the process usually ends up offering their own security services due to the enormous know-how and investment required. By using the services of established experts, companies can feel safe while saving considerable resources.”

Prosegur Crypto is the crypto custody arm of Prosegur, a multi-disciplinary security company established in 1976. Its Crypto Bunker, a security platform based on the idea 360-degree inaccessibility, combines advanced one-way HSM modules and MPC-based key derivation with armored vaults and strict, bank-level internal security practices to ensure complete protection for customer crypto funds.

For more information, contact press at [email protected]

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Dutch Bitcoin family reveals how they safeguard a fortune in crypto

A family that went all-in on Bitcoin back in 2017 has revealed their secrets to safeguarding the asset now that it has increased in price by around 5,000%.

The Dutch family of five’s storage plan includes a series of secret locations spread across four different continents.

In 2017 the ‘Bitcoin family’ liquidated all of their assets and went all-in on BTC when it traded around $900. With BTC trading over $45,000 today, their undisclosed fortune is substantially larger.

Patriarch of the family, Didi Taihutt, explained that he has hidden the hardware wallets across several countries so that he never has to fly very far if access to a cold wallet is needed.

Speaking to CNBC, he revealed that there were two hiding spots in Europe, another two in Asia, one in South America, and a sixth in Australia.

There were no secret underground bunkers, he added, and the physical locations ranged from rental apartments and friends’ homes an self-storage sites. “I prefer to live in a decentralized world where I have the responsibility to protect my capital,” he explained.

Hardware or cold wallets are a popular way to store crypto assets “offline” however, the owner is fully responsible for the private keys and there’s no one to turn to in the event of theft or loss. Castle Island Ventures general partner and Coin Metrics co-founder Nic Carter explained:

“If you want to store your coins truly outside of the reach of the state, you can just hold those private keys directly. That’s the equivalent of burying a bar of gold in your backyard,”

An alternative is to use custody services which a number of large exchanges such as Coinbase and now PayPal will provide.

For a combination of the two methods, Jack Dorsey’s Square is building an assisted hardware wallet and custody service “to make Bitcoin custody more mainstream,” as reported by Cointelegraph on July 9.

According to CNBC, 74% of Taihuttu’s total crypto portfolio is in cold storage with the remainder in hot wallets for quick access and trading. He doesn’t use banks or post offices as he finds them too risky, fearing loss of assets should bankruptcy occur.

Related: What happens to your Bitcoin when you die?

Taihuttu did admit that some centralized cold storage companies offer a major perk in the event of the death of the holder:

“They have beautiful setups for inheritance. When you die, these companies handle that, as well, and I really believe they are doing a great job.”

The family’s crypto fortune includes Bitcoin, Ethereum, and some Litecoin.


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FTX crypto exchange integrates institutional trading tool ClearLoop

FTX has become the latest crypto exchange service to join ClearLoop — an instant trading settlement infrastructure from Brevan Howard-backed Copper.co.

As part of the integration, Copper’s over 300 institutional asset managers will be able to access FTX crypto offerings such as cryptocurrency futures, options, volatility markets, as well as tokenized stocks among others.

At over one million registered users and more than $600 billion in trading volume per month, FTX is the largest crypto exchange to join the ClearLoop platform, according to the Copper announcement on Tuesday.

With Deribit and Bitfinex also part of ClearLoop, Copper’s institutional clients can now move funds among the largest crypto options, spot and derivatives exchanges in the market.

According to Copper, ClearLoop offers secure crypto trading via an offline custody solution with asset managers able to trade fund balances on exchange platforms. Thus, Copper’s clients are able to hold on to their digital assets until a successful trade execution occurs, a feature the company says helps to minimize counterparty risk.

Back in July 2020, Copper integrated with Signet, the blockchain payment platform created by Signature Bank, enabling instant payment and settlement for its clients in U.S. dollars and other fiat currencies.

Related: Hedge fund manager Alan Howard invests in two crypto startups

FTX CEO Sam Bankman-Fried said that custody remains a major part of the conversation concerning institutional involvement in crypto. Indeed, the announcement quoted Bankman-Fried saying the collaboration with Copper will help FTX “stay ahead of the pack.”

As previously reported by Cointelegraph, Copper received $25 million in an extension funding round led by Brevan Howard, the asset management firm co-founded by billionaire hedge fund manager Alan Howard.

Institutional interest in the crypto space remains unabated even with the recent price struggle for cryptocurrencies. Indeed, several reports suggest that big-money players are pursuing significant exposure to virtual currencies in the expectation of another bull run before the end of 2021.