Crypto Custody: Nomura Applies for US Trust Bank

What to Know:

• Laser Digital, Nomura’s digital asset division, has applied to become a federally regulated national trust bank in the U.S.
• The proposed bank aims to provide institutional clients with custody services for cryptocurrencies and U.S. government securities.
• This move follows a trend of established financial institutions seeking to offer comprehensive digital asset services within a regulated framework.

Laser Digital, the digital asset arm of Japanese investment bank Nomura, is making a significant move into the U.S. market by applying to the Office of the Comptroller of the Currency (OCC) to establish a federally regulated national trust bank. This initiative underscores the increasing demand from institutional investors for regulated and secure access to digital assets. The proposed Laser Digital National Trust Bank will cater to institutional clients, offering a range of services including custody for cryptocurrencies and U.S. government securities, spot trading for both crypto and fiat currencies, and staking services for eligible digital assets.

Institutional Interest in Regulated Crypto Services

Laser Digital’s application highlights the growing institutional interest in regulated crypto services. Traditional financial institutions are recognizing the need to provide their clients with secure and compliant ways to engage with digital assets. The proposed Laser Digital National Trust Bank aims to fill this gap by offering a familiar and well-governed framework for institutional investors. Purvi Maniar, Laser Digital’s chief legal officer and proposed bank president, emphasized that institutional clients are increasingly seeking ways to interact with digital assets within structures that are familiar, well governed, and regulator supervised. This trend is further validated by recent approvals granted to other major players like Ripple, Circle Internet (CRCL), BitGo, Fidelity Digital Assets, and Paxos, all of whom received initial approvals as trust banks just a month prior.

Implications for Market Structure and Liquidity

The entry of regulated entities like Laser Digital into the crypto space has significant implications for market structure and liquidity. With institutional investors gaining access to secure custody solutions and trading platforms, the overall liquidity of the crypto market is expected to increase. This influx of institutional capital could lead to greater price stability and reduced volatility, making digital assets more attractive to a broader range of investors. Moreover, the presence of regulated entities fosters trust and transparency, which are crucial for the long-term growth and maturity of the crypto market. As more institutions participate, the market structure will likely evolve to resemble traditional financial markets, with established standards and practices.

Regulatory Landscape and Compliance

The regulatory landscape for digital assets is constantly evolving, and compliance is a key consideration for institutions entering the space. Laser Digital’s decision to apply for a national trust bank charter demonstrates a commitment to operating within a well-defined regulatory framework. This approach not only ensures compliance but also provides clients with the assurance that their assets are being managed in a secure and transparent manner. The OCC’s oversight of national trust banks adds an additional layer of protection for investors, mitigating risks associated with unregulated crypto exchanges and custodians. As regulatory clarity improves globally, more institutions are likely to follow suit, further legitimizing the digital asset industry.

Laser Digital’s Bitcoin Diversified Yield Fund and Future Outlook

Laser Digital’s recent introduction of a tokenized Bitcoin yield-bearing fund, the Laser Digital Bitcoin Diversified Yield Fund, is another example of the firm’s innovative approach to digital asset management. This fund allows investors to earn yield on their Bitcoin holdings, further enhancing the attractiveness of digital assets as an investment class. Looking ahead, Laser Digital’s proposed national trust bank is poised to play a significant role in the evolution of the crypto market by providing institutional clients with secure, regulated, and comprehensive digital asset services. While the proposed bank will not offer deposit accounts or securities trading at launch, its establishment marks a crucial step towards mainstream adoption of cryptocurrencies.

Laser Digital’s move to establish a federally regulated national trust bank signals a maturing of the digital asset market, driven by institutional demand for secure and compliant services. As more traditional financial institutions embrace digital assets, the market is likely to experience increased liquidity, greater stability, and broader adoption.

Related: XRP Expansion: Ripple Hires UK Executive

Source: Original article