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Northern Trust (NTRS) to Launch Custodian for Cryptocurrency

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Northern Trust Corporation (NTRS - Free Report) in partnership with Standard Chartered’s (SCBFF - Free Report) innovation and ventures unit, SC Ventures, is introducing an institutional-grade custodian for cryptocurrencies — Zodia Custody.

The custodian is expected to start operating in London next year, post fulfilling all regulatory filings and customary closing conditions, and is subject to registration with the U.K. Financial Conduct Authority.

Zodia is a perfect combination of traditional custody principles and expertise of a bank with the benefits provided by a fintech company. These include an infrastructure that meets the high standards and expectations of institutional investors through a platform that adapts to the changing preferences of clients and the market.

Also, Zodia will provide custody services for the most-traded cryptocurrency assets, including Bitcoin, Ethereum, XRP, Litecoin and Bitcoin Cash, which represent the majority of client demand and activity. These assets account for nearly 80% of the total assets that are traded on the top cryptocurrency exchanges. Notably, the lender intends to keep adding more cryptocurrencies in the near term.

Maxime De Guillebon, Chief Executive Officer of Zodia, said “We combine the risk management, compliance, governance and security approach of a regulated financial institution with the cutting-edge innovation of crypto asset and key management technologies.”

This is not the first move of Northern Trust toward digital modes of currency. In 2017, Northern Trust, in collaboration with IBM, built a security-rich blockchain technology for managing the administration of a private equity fund. Further, in 2020, Northern Trust and BondEvalue partnered to complete the first trade of a fractionalized blockchain-based bond, working in cooperation with the Monetary Authority of Singapore.

Our Take

Northern Trust’s focus on initiating new business to tackle macroeconomic headwinds is impressive. Also, its implementation of expense reduction initiatives and strategic additional efforts to improve productivity are anticipated to yield positive results. However, low interest rates environment poses a concern.

The stock has gained 8% in the past six months compared with the industry’s growth of 10.4%.

The stock presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With the growing demand for digital currencies, companies have been making investments to ensure their availability to clients. Signature Bank (SBNY - Free Report) launched a blockchain-based payment system for its customers at the end of 2018 after receiving approval from New York State regulators.

Further, JPMorgan Chase (JPM - Free Report) launched its own cryptocurrency called the "JPM Coin" in order to help corporate clients instantly settle payments among themselves.

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