Are banks about to join the Bitcoin club?

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Are banks about to join the Bitcoin club?

Published: 12:00am, 16 Nov 2020Updated: 12:00am, 16 Nov 2020

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If you want to deposit money in an account, how many banks can you turn to? Thousands! What if you bought a bitcoin? Just 42.

At least, that was the number of institutions offering virtual custodian services, or the safe storage of virtual assets like Bitcoin, at the start of the year.

Investors can always store them at the exchanges they bought from with most usually employing ‘hot’ (connected to the internet) or cold wallets. Placing them under the stewardship of custodians gives additional security to those who need it, especially for institutional investors who make large purchases worth millions of dollars.

So it’s no surprise that Singapore-headquartered DBS Bank is looking to become one of the first brick-and-mortar financial institutions to join the club. Two weeks back, the bank took down a webpage announcing a digital assets trading platform by the name of DBS Digital Exchange, calling it a ‘work in process’. Virtual assets held by customers (mostly high-net-worth individuals) would be placed in DBS Digital Custody, a custodian solution specifically designed for the new asset class. DBS would then footsteps of Fidelity, the international broker and asset manager, that also offers custodian solutions in the United States.

Such developments will further pave the way for new retail and institutional investors to diversify their investment strategies by acquiring virtual assets. Many jurisdictions mandate the use of a custodian service before making an investment.

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