Today State Street unveiled a new division State Street Digital, dedicated to digital finance, which will incorporate cryptocurrency, central bank digital currency, blockchain, and tokenization.
State Street is the second largest custodian in the world with more than $40 trillion assets under custody, a couple of trillion shy of market leader BNY Mellon which made a similar digital assets announcement in February.
“As digital currencies and tokenization not only gain momentum, but transform financial infrastructure and operating models, we can help our clients bridge the gap between the industry of today and the one of tomorrow,” said Nadine Chakar who will lead the division. She previously was Head of State Street Global Markets and spent 18 years at BNY Mellon.
State Street highlighted two recent transactions. In one, it was appointed as the administrator of a planned bitcoin-backed exchange traded note (ETN) initiated by Iconic Funds BTC ETN to be listed on the Frankfurt Stock Exchange. Additionally, it is the fund administrator for the VanEck Bitcoin Trust, an exchange traded fund (ETF) that’s pending SEC approval.
In April, State Street said it was adapting the State Street Currenex foreign exchange trading platform for digital asset trading.
One of the interesting questions relates to digital asset custody. State Street is involved in Pyctor, the decentralized digital asset custody initiative started by ING. Other big custodians involved in Pyctor include BNP Paribas Securities Services and Citi. In 2019 State Street collaborated with Gemini Trust, piloting its digital custody solution.
Meanwhile, BNY Mellon invested in Fireblocks, Nomura collaborated with Ledger, and Standard Chartered set up a custody joint venture with Northern Trust and invested in digital asset custody firm Metaco.
State Street has already made a few bets in the sector. It’s an investor in Fnality, the digital currency initiative from 14 banks and Nasdaq. In December, it invested in crypto data firm Lukka and in April, it participated in the Series B of Securrency, a regulated security token firm.
It has also participated in trials alongside Vanguard for blockchain projects from Symbiont for foreign exchange and asset backed securities.