US Banks considering Bitcoin services
According to crypto custodian and Stone Ridge subsidiary NYDIG, hundreds of U.S. banks will soon allow trading and holding of Bitcoin. After a long period of reluctance, established financial services providers are also opening up to the new asset class.
New York Digital Investment Group (NYDIG) is a subsidiary of Stone Ridge, a $10 billion alternative asset manager. The crypto-custodian already manages $6 billion in digital assets. Among them are the Bitcoin investments of parent company Stone Ridge and insurance firm MassMutual. Major bank Morgan Stanley also used NYDIG’s services to launch its Bitcoin funds.
CNBC reported that according to the crypto custodian, soon, “hundreds more U.S. banks” will offer Bitcoin services.
Pressure on Big Banks
NYDIG President Yan Zhao believes that established financial services providers are feeling increasingly pressured to enable crypto investment. Otherwise, customers would turn to other providers.
It’s not that banks just see a big demand for Bitcoin among their customers. They say ‘We have to do this because we’ve been watching the numbers.’ They’re seeing deposits going out of their accounts to Coinbase, Galaxy Digital and Kraken.Yan Zhao, President NYDIG.
In March, Morgan Stanley became the first established bank to offer a Bitcoin fund to its customers. Goldman Sachs quickly followed with an announcement, and JPMorgan is reportedly looking into its own product in conjunction with NYDIG. In these cases, however, the banks have only targeted their Bitcoin offerings to high-net-worth individuals and family offices with tens of millions of dollars.
Bitcoin for Everyday Customers
Currently, consumers and businesses must purchase Bitcoin outside of their traditional banking relationships. According to NYDIG, their new solution allows banks to offer crypto services through a seamless, user-friendly digital interface. This would allow them to increase fee revenue, attract customers and retain them.
We’re trying to make it easy for everyday Americans and businesses to purchase Bitcoin through their existing banking relationships. If I do my banking through a mobile app, I can now buy and sell Bitcoin.Patrick Sells, Head of Bank Solutions NYDIG.
Until now, consumers have relied on apps from a new generation of fintech players. These include free trading app Robinhood, payment giants PayPal and Square, and crypto-centric firms like Coinbase. Banks, on the other hand, have stayed away from Bitcoin for retail customers, only recently announcing plans to give wealth management clients investment opportunities.
Cooperation between NYDIG and FIS
The secure custody and trading platform for managing Bitcoin transactions will be provided by technology provider NYDIG under a recently signed agreement with Fortune 500 company FIS.
Banks will be able to determine how much they charge their customers for Bitcoin transactions. They will keep most of those fees themselves. After the launch of the first Bitcoin product, NYDIG plans to offer more services, including debit card rewards paid in Bitcoin. Another future product would be a new type of bank account that is FDIC insured, but pays interest in Bitcoin.
*Originally posted at CVJ.CH