US Bancorp studying stablecoins as crypto custody arm sees revival

U.S. Bancorp’s institutional crypto custody business has seen a revival under the crypto-friendly Trump administration and the bank is “studying and watching” what role it could play with stablecoins, says its CEO.

U.S. Bancorp CEO Gunjan Kedia said on Wednesday at the Morgan Stanley US Financials Conference that her bank’s crypto custody service, created in 2021, had not fared well under the Biden administration, but that interest in the service has picked up again.

“The product didn’t really take off because the regulatory regime at that point was very uncertain for large institutional investors,” Kedia said. “That product is back, and we are very able to provide it.”

Gunjan Kedia says U.S. Bancorp has seen interest in crypto custody services pick up and is studying its role in stablecoins. Source: U.S. Bancorp

The Biden-era Securities and Exchange Commission launched multiple legal actions over crypto offerings, which soured institutional investors on crypto-related business.

However, President Donald Trump, who has family businesses involved in crypto, has largely unwound the SEC’s past crypto-related enforcement and has promised to stop future regulatory action against the industry.

US Bancorp studying role in stablecoins

Kedia said that the “bigger conversation right now” is about payments with stablecoins, which her company is “studying and watching.”

She added that U.S. Bancorp, which trades as U.S. Bank and is the fifth-largest bank in the US, could create its own stablecoin and “will be something we can do with partnerships; we have enough pilots going on.”

The market capitalization of the four largest stablecoins is it an all-time high of over $223 billion, dominated by Circle’s USDC and Tether’s USDT. Source: CoinGlass

Kedia said her bank could also provide infrastructure for the token, holding the backing assets for it and offering services such as escrow, which she said “are yet to be figured out.”

Related: Trump’s consumer protection reforms could leave crypto users in a lurch

Stablecoins are still mostly crypto-to-crypto

Kedia said that while headline stablecoin transaction volumes make it look like an attractive option for finance plays to delve into, a lot of that is still taking place within the realm of crypto.

“Underneath that, 90% of it is just cryptocurrency-to-cryptocurrency trading volume,” she added.

She added that the questions around how to structure a stablecoin offering will start to be answered by the stablecoin-regulating GENIUS Act, which aims to give rules to issuers on how to provide the tokens and which the US Senate advanced in a vote on Wednesday. 

“There’s a lot to be sorted out before the role we play solidifies in our mind,” she said.

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