northern trust - Northern Trust Is Entering The Crypto Market

Northern Trust Is Entering The Crypto Market

Northern Trust Corp., an important company that provides investment management, asset and fund administration services, is planning to enter the cryptocurrency market opening a custody service. The information has been reported by Bloomberg on July 31st.

Northern Trust Enters the Crypto Market

The Chicago-based company is now working in a project that would secure cryptocurrencies held in custody and reduce fees compared to other important custodians in the market. Indeed, the company explains that other custodians are charging very high fees and are not allowing the industry to keep growing.

Pete Cherecwich, head of corporate and institutional business at Northern Trust, explained:

“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.”

There are different companies that are now offering custody services to institutional investors, like Coinbase or BitGo. For example, Coinbase is accepting clients with $10 million dollars and is charging a fee of $100,000 dollars and 10 basis points in monthly fees. Is this sustainable?

With the incursion of Northern Trust, other investors will have the chance to choose between more custodians. If lower fees attract more wealthy investors, then we may see Coinbase and BitGo reduce their fees to remain competitive.

“You can take anything today,” Cherecwich said. “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 is already providing other services to funds that invest some assets in virtual currency futures. But, Cherecwich noted that Northern Trust won’t put out a custody product for 12 more months.

In the future, governments may digitize currencies using blockchain technology, so the company is getting prepared for this revolution in the way we conceive money.

We wrote several times at UseTheBitcoin how different central banks around the world are investigating possible use cases of Central Bank Digital Currencies (CBDCs). Furthermore, they have been researching the impact these could have in the economy and the financial system as a whole.

 

Photo courtesy of Northern Trust

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