Investment Bank Cowen Jumps Into Crypto Custody for Institutions

By Will Gottsegen

The 103-year-old investment bank Cowen Inc. has announced plans to hold cryptocurrency for its institutional clients.

It’s the bank’s first foray into the world of digital assets, and follows similarly crypto-curious moves from the likes of Goldman Sachs and Morgan Stanley.

The difference is that where Goldman and Morgan Stanley are plotting indirect access to crypto (via futures trading and mutual funds, respectively), Cowen plans to actually custody crypto—something no major Wall Street banks have yet tried.

Cowen Digital Asset Investment Company & @PolySignInc launch strategic partnership to provide solutions to institutional clients that hold #cryptocurrencies & other #DigitalAssets in their portfolio. Learn more: https://t.co/Mkxnonepqz#CowenDigitalAssets #Cryptocurrency #Crypto pic.twitter.com/bDM3AHe0pf

— COWEN (@Cowen_Inc) May 13, 2021

Cowen has partnered with Standard Custody & Trust Co. for its custody services, and will make a $25 million investment in Standard’s parent company, PolySign.

Though demand for crypto has surged in 2021, thanks in part to recent spikes in the price of Bitcoin, traditional banks remain generally skeptical about holding crypto directly.

What Seven Banks Have Said About Bitcoin

Bank of America put out a note earlier this year suggesting that Bitcoin is too easily manipulated, too unstable, and too hard on the environment to be a reasonable addition to an investor’s portfolio.

Silicon Valley’s financial institutions tend to be more positive about crypto: Square, the digital payments company led by Twitter’s Jack Dorsey, led the charge by investing $50 million in Bitcoin last fall, though it has since defended its decision by peddling propaganda (disputed by Citi) about the environmental impact of proof-of-work blockchains.