US Bancorp Bitcoin Custody Return Tests Banks Against Coinbase

A shelved product comes back

U.S. Bancorp has restarted the institutional bitcoin custody service it first announced in 2021 and then put on hold for more than three years. Executives credit the Trump administration's friendlier stance on crypto for giving traditional lenders room to move further into digital assets.11 The relaunch was announced on September 3, 2025. It is open only to Global Fund Services clients who join an early access program. The target customers are institutional investment managers running registered or private funds that need a place to store bitcoin.1420 The new piece is that spot bitcoin exchange-traded funds can now sign up as clients.11

The setup is a hybrid. U.S. Bank deals with the clients, and NYDIG, a crypto firm, acts as sub-custodian and holds the actual coins.1118 NYDIG also filled that role in the 2021 version, so the bank is reusing an arrangement it already had rather than building a new one.20 Stephen Philipson, who runs the bank's wealth, corporate, commercial and institutional businesses, described it in those terms: the bank already had the playbook and is now running it again.13 He also said fund managers are reassured by a bank-owned provider with a long track record.11

Coverage disagrees on a few small facts. Most outlets call U.S. Bancorp the fifth-largest commercial bank in the country, but at least one says seventh.1220 Most say the pause lasted three years, while one calls it a four-year hiatus.1516 The core facts are the same everywhere: bitcoin only for now, NYDIG holding the assets, ETFs eligible, and other tokens possible later if they meet the bank's standards.1213

The accounting rule that froze the business

All accounts agree on why the service stopped. In March 2022 the SEC issued Staff Accounting Bulletin No. 121, which made firms holding crypto for customers book those holdings as both a liability and an asset at fair value.2128 Banks are subject to capital rules, so this effectively meant holding capital against assets that belonged to clients. That made custody uneconomic at scale, and the program went on hold in early 2022.1522

The guidance drew opposition from both parties. Congress passed a resolution to overturn it in May 2024, but President Biden vetoed it, and there were not enough votes to override.2528 Once the administration changed, the barrier fell quickly. On January 23, 2025, the SEC issued SAB 122, which withdrew the earlier guidance and returned custodians to ordinary loss-contingency accounting.2124 Lawyers pointed out at the time that this did not remove every liability question. Custodians still have to apply standard accounting principles and give investors full disclosures.2528

Bank regulators also eased up

In my reading, the SAB 122 explanation tells only part of the story. Accounting was the most visible obstacle. The bigger long-term question was whether bank supervisors would let lenders proceed, and they have stepped back on several fronts. In March 2025 the OCC told banks they could offer crypto custody and related services without asking for approval first.1417 The OCC, FDIC and Federal Reserve also dropped "reputational risk" from their exam criteria.15 In August 2025 the Fed ended a supervisory program it had used since 2023 to monitor banks' crypto activities.16

Guidance still differs on this point. One industry primer still says banks need supervisory approval before offering custody, which conflicts with the OCC's March position.21 The best explanation is that rules differ by charter and regulator. National banks can rely on the OCC's statement, but every institution still has to show it meets safety and soundness standards.

Legislation has followed. The GENIUS Act became the first federal stablecoin law, and the White House is pushing Congress to pass the CLARITY Act as a broad framework for digital assets.17 Supporters say CLARITY would classify many digital assets as commodities under CFTC oversight and make it cheaper for banks to act as ETF custodians.6

The real target is ETF custody

U.S. Bancorp's aim is clear from all the coverage: the custody business behind spot bitcoin ETFs. When the bank relaunched, those funds had taken in about $54.57 billion in cumulative net inflows and held roughly 6.45% of all circulating bitcoin.18 Coinbase dominates that business. It has said it serves more than 80% of crypto ETF issuers.11 Another tally puts it as custodian for 9 of 11 spot bitcoin ETFs.33

The flows since then show the demand is real but unsteady. Cumulative inflows peaked at $61.19 billion in October 2025.8 From November 2025 through February 2026 the funds then lost a net $6.38 billion as bitcoin fell from its high.1 One institutional holder, the Wisconsin state pension fund, sold its entire position in an earlier downturn. That suggests institutional money moves with returns too and is not necessarily patient.1 As of early October 2026, cumulative net inflows stand near $57.8 billion and total net assets near $108.9 billion.9 Citigroup lowered its 12-month bitcoin target in July after cutting its expected ETF inflows to zero.9

For a custodian, though, the deciding number is assets under custody, not net flows. Even in a slow flow year, a roughly $100 billion pool of bitcoin held for regulated funds is a large, sticky fee business. That is why banks keep entering even when inflows stall. Distribution is also widening. Bank of America now lets its advisors recommend spot bitcoin ETFs, following Morgan Stanley, Fidelity, JPMorgan and Wells Fargo.6

Crypto firms are becoming trust banks

The competition did not wait for the banks. U.S. Bancorp joined a market already served by BNY Mellon and Fidelity, along with crypto-native providers Coinbase, BitGo and Anchorage Digital.1217 Since then, crypto firms have moved quickly into federal oversight. In December 2025 the OCC conditionally approved national trust charters for Circle, Ripple, Paxos, BitGo and Fidelity Digital Assets.35 Bridge, Crypto.com and Protego followed in February 2026, and Coinbase in April.3638 Circle announced final approval on July 10, 2026.38

Coinbase's charter could undercut one of U.S. Bancorp's main selling points. A federally supervised trust company would give Coinbase qualified custodian status under SEC rules, a credential that compliance teams at large institutions often require.32 Coinbase says it will move its institutional custody business into the new entity over three years. It has also stressed that it is not becoming a commercial bank.3132 Philipson's argument that a bank-owned provider offers more comfort carried more weight in 2025, when the main rivals had state charters. As more of them gain federal oversight, that edge shrinks.

The charter wave is also contested. Bank trade groups oppose it. The Independent Community Bankers of America called Coinbase's approval a grave mistake, and the Bank Policy Institute has reportedly considered suing the OCC.3136 Senator Elizabeth Warren has questioned the OCC about the approvals. BitGo's CEO responded that trust banks do not take deposits, lend customer assets or commingle funds.34 Incumbents are also applying for the same charters: Morgan Stanley filed for an entity called Morgan Stanley Digital Trust.38

Treasury companies also need custodians

Corporate bitcoin treasuries are part of the custody market too. Strategy, the largest of these companies, holds about 848,000 BTC. Its market value is now only about 1.01 times the bitcoin it holds.43 Across the sector, about 197 public companies held roughly 1.273 million BTC as of late September 2026.42 Most have lost the premium to net asset value that made issuing stock to buy bitcoin pay off for shareholders. Some, such as MARA and Riot, have sold coins to pay down debt or fund new businesses.41 In June, Strategy's board authorized up to $1.25 billion of bitcoin sales to cover dividends, interest and buybacks.42

This matters for custodians. Treasury companies are now trying to earn yield, borrow against holdings and manage collateral, and each of those depends on custody and controls.42 A bank-grade provider could eventually offer them more than storage. For now, U.S. Bancorp's program only serves fund managers, so this would be a future expansion, not part of today's launch.

What it means

U.S. Bancorp's return is a cautious bet, not a breakthrough. It brought back an existing arrangement, kept NYDIG holding the coins, started with bitcoin only, and limited access to an early program. Executives have also said they expect stablecoins and payments to drive the next phase.1213 The relaunch shows how quickly large banks returned once the accounting and supervisory barriers came down. It also shows that this wave of deregulation lets crypto firms compete as regulated trust banks. Banks still have trust and long client relationships. In my view, whether that wins business over Coinbase's scale and its pending federal charter will depend on the next ETF sub-custody mandates, not on the announcement itself.