The level of assets held in South Dakota trusts dipped slightly from 2021 to 2022.
For four years prior, assets held in South Dakota trusts had grown by roughly $100 billion annually.
It’s the first dip in assets reported since the 2008 housing crisis.
Total assets dipped from $607 billion at the end of 2021, to $590 billion at the end of 2022.
State banking officials say that dip is driven by the decline in digital assets reported. That includes assets like cryptocurrency.
Cryptocurrency assets represent barely two percent of all assets held in South Dakota trusts.
Barry Sackett, the head of South Dakota Blockchain, said cryptocurrency took a hit following the bankruptcy of the exchange platform FTX last November.
“The value of digital assets fell in 2022 for a variety of reasons. The collapse of FTX was one of those reasons,” Sackett said.
According to the state Division of Banking, the value of cryptocurrency assets held in custody on Dec. 31, 2022, was $11,087,278,000. At the time, Bitcoin was worth about $16,500. That translates to roughly 670,048 bitcoins. Bitcoin is now worth approximately $30,000.
Bitcoin is just one of many cryptocurrencies.
The decline in cryptocurrency is reflected in what the state classifies as “custody assets.” Those assets are basically individual retirement accounts held in trust. Some of the accounts invest in digital assets, like crypto.
Jim Hitt is president of New Vision Trust Company, a trust company registered in South Dakota which offers investing retirement accounts into alternative assets. Hitt said New Vision does not invest in digital assets because they’re too risky.
He said the rise in interest rates also slowed growth in assets reported.
“With the interest rates going up, bonds go down. If you had $1 million worth of bonds and the rates are one percent, the bond might be worth $950,000. Then, if it's six percent the bond might be worth $400,000,” Hitt said. “That’s going to reflect on the assets of the company. So, those are what’s called custody assets."
Hitt said he does not believe there is anything systemic going on with the dip in assets reported.
