US Custody Bank Northern Trust Helping Hedge Funds Invest In Cryptocurrencies

Investing, News | August 1, 2018 By:

Northern Trust, a major US custody bank, has reportedly begun to open up some of its services to cryptocurrency hedge funds.

Northern Trust is a financial services company organized in Delaware and headquartered in Chicago, Illinois that caters to corporations, institutional investors, and high net worth individuals. The firm’s asset management services offer both active management and passive management strategies for equity and fixed income investing, as well as alternative asset classes such as private equity and hedge funds and multi-manager products and services.

In an interview with Forbes, Pete Cherecwich, the president of Northern Trust’s corporate and institutional services, said that the firm has been working with three “mainstream hedge funds” that have begun stealthily adding cryptocurrency investments to their portfolios. He said the firm is not currently taking direct custody of cryptocurrency, but the it is providing hedge funds with administrative services such as helping them assign values to their investments.

While Northern Trust seems to hold high hopes for their custody service, Cherecwich said that the firm will not launch a custody product for digital assets for at least another 12 months. He said helping hedge funds for their crypto investments is part of a larger effort to prepare for the day when fiat currencies are also issued on a blockchain.

“I do believe that governments will ultimately look at digitizing their currencies, and having them trade kind of like a digital token — a token of the US dollar — but the US dollar [would still be] in a vault somewhere, or backed by the government,” said Cherecwich. “How are they going to do that? I don’t know. But I do believe they are going to get there.”

In February 2017, Northern Trust launched the first commercial implementation of blockchain technology for private equity, which allows audit firms to carry out audits of private equity lifecycle events directly from the blockchain.