It comes as no surprise that more and more financial institutions today are showing their interest in cryptocurrencies. Financial services giant Northern Trust, that ranks among Fortune 500 list comprising the largest U.S. companies, has also expressed its interest in the cryptocurrency ecosystem. As it has been revealed, the company plans to launch a custody service for digital assets.
Northern Trust is a 129-year-old Chicago-based firm which has almost $10.7 trillion in assets under custody and administration. It provides financial services to corporations, high net worth individuals and institutional investors.
Currently, it can already offer some of its services, namely fund administration services, to cryptocurrency hedge fund betting on Bitcoin and Ethereum as well. Moreover, its specialists are working on finding ways of blockchain technology implementation into its private equity division.
Commenting on their groundbreaking projects, Pete Cherecwich, the president of Northern Trust’s corporate and institutional services, expressed his opinion about the potential of incorporating blockchain into the company’s activity saying:
“You can take anything today. You can take movie rights, you can take all sorts of entities, and you can create a token for those. We have to be able to figure out how to hold those tokens, value those tokens, do those things.”
According to Cherecwich, the company’s specialists have already started their work on development of a strategy that will allow to secure custody-held digital assets. Moreover, he promised to introduce some services that would be similar to those already offered but would come at lower fees. Cherecwich added:
“The fees right now the custodians are charging are pretty high, not the same fees that we get — ultimately, I believe unsustainable, because it needs to be an efficient model.”
Nevertheless, administration and private equity services for cryptocurrencies is only a small part of the entire blockchain plan developed by Northern Trust. Given comparatively low transaction rates, private equity industry is considered to be a good sphere for applying blockchain solutions.
Cherecwich also emphasized that usage of a shared distributed ledger would increase the level of transparency in this industry which, in turn, would attract the attention of auditors and regulators across other industries.
The company wants to be prepared for this growing demand. Earlier this year, together with Big Four accounting firm PwC, it has presented a suite of auditing tools that are aimed to providing real time access to data on the distributed ledger.
Speaking about his view on blockachain, Cherecwich stated:
“Since blockchain has an immutable record, you put a robot as a node on that immutable record, and I don’t care whether it’s private equity or anything, then that robot can audit those transactions, and make sure everything syncs automatically.”
Let us also remind that Northern Trust entered blockchain field as early as in February, when in cooperation with IBM and some other stakeholders, it announced the launch of the first commercial application of the blockchain technology to manage private equity funds.