Century-old investment bank Cowen announced it would hold cryptocurrencies for hedge funds and asset managers. The bank becomes the first wall street giant to offer institution-grade crypto custody service.
The firm will provide “Institutional-grade” custody services for cryptocurrencies and other digital assets through a partnership with Standard Custody & Trust Co. It will also make a $25 million investment in PolySign Inc, part of its $53 million series B funding round.
Jeffrey Solomon, Cowen’s CEO said in an interview, “The demand is clearly here. We’re going to be able to help a lot of our institutional clients get over the hump and start trading digital assets in the not-too-distant future.”
The Securities and Exchange Commission said its careful consideration of how to apply custody rule which aims to ensure that funds held by custodians would not be vulnerable to risks such as loss or misuse in the market.
Currently, the scarcity of custodians has remained a problem for asset managers, Solomon said, “If you’re an institutional investor with a fiduciary requirement, the bar is extremely high for you to put investment in any asset that doesn’t have a clear chain of custody that you can access at a moment’s notice. Even if you had a view on asset class, if you can’t demonstrate custody then you can’t trade it.”
Several wall street giants including Goldman Sachs Group Inc. and Morgan Stanley announced to help institutional clients amid growing demand. Fidelity Investments has been helping clients hold and trade digital assets, many investment banks have been slow to offer formal custody services for crypto.
Led by CEO Jack McDonald, PolySign is developing products that allow financial institutions to work with digital assets. McDonald said, “We’re very excited about launching with that New York charter over our door”.