U.S. Bancorp's institutional crypto custody business is experiencing a resurgence, with CEO Gunjan Kedia stating at the Morgan Stanley U.S. Financials Conference that the bank is examining its role in the stablecoin market. Under the crypto-friendly policies of the Trump administration, the bank's custody services, originally established in 2021, have seen renewed interest after struggling during Biden's tenure where regulatory uncertainty discouraged institutional investors.
Kedia mentioned, "The product didn’t really take off because the regulatory regime at that point was very uncertain for large institutional investors. That product is back, and we are very able to provide it." While the current political climate seems more favorable, Kedia acknowledged that previous regulatory actions taken by the Biden-era SEC had a detrimental impact on crypto adoption among institutional players.
A focal point of U.S. Bancorp's strategy revolves around stablecoin payments, with Kedia explaining, "The bigger conversation right now is about payments with stablecoins, which we are studying and watching." The bank is also considering partnerships that could lead to the creation of its own stablecoin, along with infrastructure services to support it, like asset custody and escrow capabilities.
Despite the optimism, Kedia emphasizes that most stablecoin transactions are still primarily crypto-to-crypto exchanges, with only about 10% used in traditional finance applications. As the U.S. Senate advanced the GENIUS Act aimed at regulating stablecoin issuance, Kedia noted that clearer guidelines could help shape the financial services landscape.
"There’s a lot to be sorted out before the role we play solidifies in our mind," she stated, indicating a cautious yet hopeful outlook for the integration of stablecoins.
Kedia mentioned, "The product didn’t really take off because the regulatory regime at that point was very uncertain for large institutional investors. That product is back, and we are very able to provide it." While the current political climate seems more favorable, Kedia acknowledged that previous regulatory actions taken by the Biden-era SEC had a detrimental impact on crypto adoption among institutional players.
A focal point of U.S. Bancorp's strategy revolves around stablecoin payments, with Kedia explaining, "The bigger conversation right now is about payments with stablecoins, which we are studying and watching." The bank is also considering partnerships that could lead to the creation of its own stablecoin, along with infrastructure services to support it, like asset custody and escrow capabilities.
Despite the optimism, Kedia emphasizes that most stablecoin transactions are still primarily crypto-to-crypto exchanges, with only about 10% used in traditional finance applications. As the U.S. Senate advanced the GENIUS Act aimed at regulating stablecoin issuance, Kedia noted that clearer guidelines could help shape the financial services landscape.
"There’s a lot to be sorted out before the role we play solidifies in our mind," she stated, indicating a cautious yet hopeful outlook for the integration of stablecoins.
