Northern Trust, one of the largest and oldest banks in the US is providing custody services with special features to a select group of hedge funds betting on Bitcoin (BTC) and Ethereum (ETH) while providing lower fees than the existing crypto custodians in the market.
Northern Trust, one of the oldest & largest banks enters the crypto market
The financial services company, Northern Trust Corporation is making its way into the crypto market as it has “significantly expanded” its work with cryptocurrencies and blockchain across various divisions.
Northern Trust is one of the oldest and the largest banks in the United States that has about $138.59 billion (as of 2017, wikipedia) worth of total assets. Now, the organization has opened its fund administration services to only a select group of hedge funds that are betting on Bitcoin (BTC) & Ethereum (ETH) as reported by Forbes.
According to the Bloomberg report, the 129-year old Chicago-based company is already started working its way to secure the digital assets held in custody. This is while offering lower fees than the existing crypto custodians like Coinbase and BitGo which are charging way more than the traditional custodians.
As reported by Bloomberg, “Coinbase is taking on clients with a minimum of $10 million, and crypto-trade a $100,000 setup fee and 10 basis points in monthly fees.”
Peter Cherecwich, the head of corporate and institutional business at Northern Trust has been quoted as saying:
“The fees right now the custodians are charging are pretty high, not the same fees that we get –- ultimately, I believe unsustainable, because it needs to be an efficient model.”
Special services specifically for the crypto division
In an Interview with Forbes, Peter explained the reasons behind going the crypto route:
“You can take anything today. You can take movie rights, you can take all sorts of entities, and you can create a token for those. We have to be able to figure out how to hold those tokens, value those tokens, do those things.”
Northern Trust has been already helping the hedge funds since the first quarter of this year. The company has introduced special services such as asset existence validation, crypto-trade reconciliations, new risk and control frameworks for anti-money laundering and handling the net asset value pricing arrangements for the cryptocurrency market.
However, the company is not taking direct custody of cryptos and not planning on taking it up in near future. But this is a preparation for the day when fiat will be launched on blockchain as stated by Cherecwich:
“I do believe that governments will ultimately look at digitizing their currencies, and having them trade kind of like a digital token — a token of the U.S. dollar — but the U.S. dollar [would still be] in a vault somewhere, or backed by the government…How are they going to do that? I don’t know. But I do believe they are going to get there.”
Northern Trust is also building a private equity platform on blockchain and has the specialists working on it for past six months.
Having a background in writing, I worked on a wide array of industry topics and have recently entered the world of Blockchain and Cryptocurrency.