Wall Street Banks Have Started Offering a Range of Cryptocurrency Services

U.S. financial regulators have been warning of growing risks as some of the top American banks have started to capitalize on the popularity of the cryptocurrencies to offer related services to clients.

Bank of New York Mellon announced in February last year that it would hold, transfer and issue bitcoin for asset management clients, one of the first announcements of its kind for a major Wall Street bank. The launch is expected later this year. BNY Mellon plans to offer clients services to store bitcoin and ethereum in crypto wallets.

U.S. Bancorp started its bitcoin custody services last October. Bitcoin company NYDIG is acting as a sub-custodian for the bank. The services are geared toward institutional investment managers with private funds.

State Street Corp said in March that it was planning to offer cryptocurrency custody services in partnership with crypto infrastructure platform Copper.co, although it warned that the offering was subject to regulatory approval.

Deutsche Bank also revealed plans to develop a service to hold and trade cryptocurrencies for institutional investors in a 2020 World Economics Forum report. The bank stated it had already completed a proof of concept.

BNP Paribas completed a proof of concept as well with crypto wallet provider Curv to develop a secure method to transfer tokenized securities.

Moreover, a number of big banks started to offer wealth management clients exposure to crypto in 2021. Morgan Stanley has been working to grant access to three bitcoin funds for clients with at least $2 million in assets held at the bank.

In July, JPMorgan Chase allowed its financial advisers to accept buy and sell orders from its wealth management clients for five cryptocurrency products. Wells Fargo also began offering its wealthy clients cryptocurrency exposure in the summer of 2021.

Citigroup’s wealth management unit put together a digital assets group in June to facilitate investments in cryptocurrencies, stablecoins, non-fungible tokens and central bank digital currencies. Goldman Sachs is also offering wealthy clients access to an ethereum fund through crypto company Galaxy Digital.

In March 2021, Goldman rebooted its cryptocurrency trading desk. The team deals bitcoin futures and non-deliverable forwards, a derivative that allows the bank’s clients to take a view on bitcoin’s future price. In March this year, Goldman Sachs doubled down to become the first major U.S. bank to carry out an over-the-counter crypto trade in partnership with Galaxy Digital.

In July 2021, Bank of America gave a green light to trading bitcoin futures for certain clients through a partnership with CME Group. The banks said in a statement that it was considering strategies related to cryptocurrency and other digital assets.

Citigroup said last August it was considering offering bitcoin futures trading for some institutional clients.

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