Bank in Puerto Rico launches its digital-asset custody service

A long-planned digital asset custody service from a bank is coming to life.

On Wednesday, FV Bank, which is headquartered in San Juan, Puerto Rico, announced that it is launching its digital-asset custody and settlement services, which will let customers hold, transfer and settle both digital assets and fiat currencies in one account. The service will support Bitcoin to start, with Ethereum, USDC, and USDT custody expected to launch in the next few weeks. 

FV is a digital bank that targets customers in the U.S. and abroad, including family offices, funds, exchanges, trading desks and liquidity providers.

"Our primary goal since founding FV Bank has been to help drive blockchain technology innovation in financial services by offering institutional clients a technology solution seamlessly integrated into a regulated bank," Miles Paschini, FV Bank's chief executive, said in a press release. "The infrastructure we are delivering to the marketplace will help bridge the divide between the traditional financial sector and the digital asset economy."

Digital banking

Challenger bank in Puerto Rico combines checking, crypto in one account

FV Bank will let users hold crypto and traditional currencies in the same account. It says it can do that because it’s licensed in the U.S. territory as a bank and a digital-asset custodian.

By Miriam Cross

November 1

The company chose Puerto Rico as its headquarters because the Office of the Commissioner of Financial Institutions of Puerto Rico is open to merging blockchain and banking, and the bank could enjoy a lower corporate tax rate while having access to the Federal Reserve System to apply for a master account and use the FedWire and ACH systems. It has applied for a master account but has not been approved yet. FV must adhere to the same Bank Secrecy Act and anti-money-laundering standards as any other U.S. bank. In the same press release announcing its custody services, FV noted that it had integrated its ACH payments processing service for debits.

Many banks have been exploring crypto custody, but combining fiat and digital currencies is unusual.

"Usually you see institutions offering one or the other but not both," Sam Wyner, head of KPMG's crypto practice in the Americas, said in a November 2021 story.

A number of large banks have been delving into cryptocurrency capabilities. Bank of New York Mellon went live with its crypto custody service in October for institutional investors. JPMorgan Chase has been working on blockchain and digital-asset technology for seven years. U.S. Bancorp announced a number of crypto custody initiatives in April 2021.