JPMorgan, Wells Fargo pitching crypto funds to their clients

abdelaziz Fathi

Cryptocurrency custody firm NYDIG has partnered with Wells Fargo and JPMorgan to offer the custodial services for two passive bitcoin funds they plan to offer to their respective clients. The two megabanks have quietly registered their crypto trusts with the U.S. Securities and Exchange Commission on Thursday.

JPMorgan Chase

The collaboration will be powered by NYDIG’s regulated bitcoin platform, which is the cryptocurrency arm of Stone Ridge, a $10 billion alternative asset manager.

Wells Fargo and JPMorgan separately partnered with NYDIG for the trusts, according to SEC filings. Both lenders will receive an unknown percentage of sales made through their subsidiaries that refer clients to NYDIG.

Banks have been moving to offer cryptocurrency investment products because they are seeing deep-pocket investors sending money to crypto exchanges and digital-asset managers, such as Coinbase and Grayscale. The latter saw its Assets Under Management (AUM) ballooned in August to $41.4 billion. The Grayscale family of products attracted nearly $7 billion over the last two weeks.

This trend has gained momentum due to growing institutional demand as the cryptocurrency market matures after a huge run-up in prices over the past couple of years

JPMorgan Chase has already begun giving its wealthy clients access to six cryptocurrency investment funds. However, it was not the only financial institution exploring the potential of cryptocurrency as part of its efforts to modernize their legacy investment vehicles.

Goldman Sachs has also reopened a trading desk to make markets in cryptocurrencies back in March. The investment bank had announced similar plans back in 2018 before ditching the idea of a trading desk dedicated to crypto assets, citing regulatory uncertainty.

Having worked out security issues such as how it would custody the assets, the New York-based bank now is using its own money to trade with clients in a variety of non-deliverable forwards linked to the price of Bitcoin.

Elsewhere, Morgan Stanley also got involved in cryptocurrencies, launching access to three funds that enable ownership of bitcoin. The bank’s wealthier clients with “an aggressive risk tolerance” and have at least $2 million in assets can invest up to 2.5% of their net wealth in bitcoin funds.

BNY Mellon also revealed plans in February to provide its clients with ‘an integrated service’ for digital assets, which covers classic cryptocurrencies and could be extended to stablecoins.

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