Northern Trust: New Blockchain Offerings for Private Equity, Crypto Hedge Funds

Delaware-based financial services firm Northern Trust has taken steps to expand the role that blockchain and cryptocurrencies play in its operations, according to Forbes. The 129-year-old company’s foray into the new technology represents one of the most significant steps by a major financial institution into blockchain to date.

The company, which manages nearly $10.7 trillion in assets, has added blockchain services for managing its private equity workflow. Additionally, the company has reportedly begun offering its fund administration services to a small number of cryptocurrency hedge funds.

Time to buy the dip?

Northern Trust has DEveloped Auditing Services Specifically for Crypto

Pete Cherecwich, the president of Northern Trust’s corporate and institutional services, told Forbes that his company is working in partnership with three “mainstream hedge funds” that have recently added cryptocurrency to their portfolios.

Pete Cherecwich.

Northern has also developed a number of new administrative services that are intended specifically for cryptocurrency, including asset existence validation, crypto-trade reconciliations, and new risk and control frameworks for AML practices.

In its work with hedge funds, the company is comparing the hedge fund’s reported numbers with the actual amount of cryptocurrency on record at each customer’s crypto custodian. Northern Trust also values investments for clients, and keeps record of fund valuation.

As for its private equity services, Northern has added a number of new features to its Hyperledger-based blockchain fabric, which was originally launched in 2017. Cherecwich said that the service, which was originally created for Swiss financial firm Unigestion, has also been tested by “well over 100 clients.”

Cherecwich Believes that Asset Tokenization is the Future

Cherecwich also said that he believes custodial services for tokenized assets will soon be in high demand. “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,” he said. “We have to be able to figure out how to hold those tokens, value those tokens, do those things.”

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— Northern Trust (@NorthernTrust) July 11, 2018

He added that he believes that governments will begin to tokenize their own currencies: “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 U.S. dollar — but the U.S. dollar [would still be] in a vault somewhere, or backed by the government.”