US Bancorp Studies Stablecoins Amid Revival of Crypto Custody Business
Overview
U.S. Bancorp, one of the largest banks in the United States, is exploring the potential of stablecoins as its crypto custody services witness renewed interest. Gunjan Kedia, the CEO of U.S. Bancorp, spoke at the Morgan Stanley U.S. Financials Conference, outlining the bank’s ambitions in the cryptocurrency sector following a challenging period under the Biden administration.
Resurgence of Crypto Custody
U.S. Bancorp’s crypto custody service, which launched in 2021, has experienced a notable revival. Kedia noted that the service struggled during the Biden presidency due to a regulatory environment that was deemed uncertain by institutional investors.
“The product didn’t really take off because the regulatory regime at that point was very uncertain for large institutional investors,” Kedia explained. However, with a shift towards a more crypto-friendly regulatory landscape, interest in U.S. Bancorp’s services is picking up.
Impact of Regulatory Changes
The Biden-era Securities and Exchange Commission (SEC) initiated a series of legal actions against various cryptocurrency offerings, leading to a cooling effect on institutional investment in the crypto space. Conversely, the Trump administration’s approach has favored a more relaxed regulation strategy, promising to unwind previous enforcement actions in the arena.
“President Donald Trump has largely unwound the SEC’s past crypto-related enforcement and has promised to stop future regulatory action against the industry,” Kedia commented, highlighting the contrast in regulatory attitudes.
Focus on Stablecoins
Amidst this regulatory shift, Kedia emphasized that stablecoins are a focal point for U.S. Bancorp. The bank is not only studying the role it can play in this sector but also considering the possibility of creating its own stablecoin. “There’s a bigger conversation right now about payments with stablecoins, which we are studying and watching,” she stated.
With major players like Circle and Tether dominating the market, U.S. Bancorp is looking to explore partnerships that could facilitate the development of a stablecoin. The bank is equipped to hold backing assets and offer services related to stablecoins, although Kedia noted that “a lot of things are yet to be figured out.”
The Market Landscape
The total market capitalization of the four leading stablecoins has reached an all-time high of over $223 billion, underscoring the growing prominence of these digital assets in the financial ecosystem. However, Kedia pointed out that a significant portion of stablecoin transactions remains confined to cryptocurrency-to-cryptocurrency exchanges. “Ninety percent of it is just cryptocurrency-to-cryptocurrency trading volume,” she added.
The CEO indicated that the forthcoming GENIUS Act, aimed at regulating stablecoins, will provide clarity and guidance for financial institutions regarding how to structure stablecoin offerings.
Conclusion
As U.S. Bancorp navigates the evolving landscape of cryptocurrency, the bank’s renewed interest in its crypto custody services and potential involvement in stablecoins reflects a broader trend among traditional financial institutions to adapt to the changing digital asset market. Kedia’s statements at the Morgan Stanley U.S. Financials Conference illustrate the bank’s commitment to staying relevant in the fast-paced world of cryptocurrency and blockchain technology.
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