Prime Trust Undercuts Rivals in Crypto Custody Race

Prime Trust won't charge its clients to custody digital assets any longer.

The Nevada trust company announced Thursday that, effective immediately, it had lowered its fee for storing cryptocurrencies and tokens to $0, in line with what it charges to custody stocks and bonds.

Prime Trust began to custody crypto assets last year, when it offered cold storage services for bitcoin. It later expanded its custody offerings to include ether, ERC-20 tokens and Stellar lumens.

Crypto custodians typically charge custody fees ranging from 4 to 10 basis points per month, Prime Trust said Thursday. Dropping this charge makes it cheaper and faster for Prime Trust's clientele – which includes crowdfunding portals, exchanges, broker-dealers and stablecoin platforms – to conduct operations.

Explaining the move in an email, Prime Trust CEO and chief trust officer Scott Purcell noted that in the traditional finance world, "no qualified custodian" charges fees for safekeeping stocks, bonds, exchange-traded funds (ETFs), mutual funds or real estate, citing examples such as Etrade, Robinhood, Northern Trust and JPMorgan (though Prime Trust does charge a $350 annual custody fee for real estate, according to its fee schedule).

As such, charging a custody fee just because the asset is a crypto token did not make sense, he added. The move aims to "conform to standard practice" in the financial industry, although he claimed Prime Trust was the first in crypto to nix custody fees.

No free lunch

Purcell told CoinDesk that Prime Trust has other sources of revenue to make up for the removal of custody fees, explaining:

"We make money just as Robinhood, Northern Trust and other traditional custodians do. The costs of custody are offset by other services."

For example, he said, customers who store crypto with Prime Trust also often park their fiat there, and the institution can earn interest on the latter.

According to The Clearing House, a banking association and payments firm, at traditional custodians, these other services can include fund administration, securities brokerage, payments, lending, performance data and asset servicing, all of which typically carry their own specific fee. Interest income from reinvested client funds also typically make up "an important component" of custodians' revenue, TCH's white paper on custodial services said.

When asked if Prime Trust could lend out digital assets the way traditional custodians lend customers' securities, Purcell said, "we're exploring that."

Prime Trust does charge a $50 disbursement fee for processing crypto assets, as well as any additional costs that may be incurred such as gas prices on the ether network.

Safe deposit boxes image via Shutterstock

UPDATE (31, January 20:00 UTC): This article has been updated with additional comments from Prime Trust.