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Banking Giant State Street Acknowledges Clients’ High Interest for Crypto Custody

Speaking at the American Banker BlockFS conference in New York on Thursday, Jay Biancamano, State Street’s managing director for digital product development and innovation, acknowledged there is “a high level of interest”.

He said:

“There is no sense of urgency on the part of our clients to move into these assets right now. When they do, we want to meet them there. There is a very high level of interest but no need to move because currently none of our clients are looking for us to house these assets in custody.”

State Street recently dethroned BNY Mellon, a firm that previously held the title of the world’s largest custodian for three straight years. The famous bank currently handles just over $33.12 trillion in assets under custody. State Street’s economic strength along with its long time in financial markets adapting to the generational changes that the United States has experienced attest not only to the growth of the cryptocurrencies but also to the “business authority” that such an important bank could use to give an excellent image to the crypto-money markets.

Recent announcements around large institutions such as Fidelity Investments taking up crypto as an asset class has led to a febrile sense of anticipation among Wall Street incumbents and crypto-native companies alike.

Coinbase and BitGo, who joined State Street on the Block FS custody panel, have gained qualified custodian licenses. Meanwhile, in the traditional custody world, Northern Trust and Japanese bank Nomura are known to be working on digital asset custody solutions.

As it has become known, Fidelity Investments wants to expand its platform’s offerings. The firm is planning to go beyond just two cryptos adding trading services for the top five to seven cryptocurrencies by market capitalization.

In September, in a major breakthrough, cryptocurrency startup BitGo got the regulatory approval as a qualified custodian of digital assets. As per the official press release, the BitGo Trust Company got an official license from the South Dakota Division of Banking. BitGo’s chief compliance and legal officer Shahla Ali said that the company can now pitch regulated storage solution to institutional investors.

In October, New York regulator – New York State Department of Financial Services (NYDFS) issued an official approval to Coinbase Custody Trust Company LLC, to operate as “a limited purpose trust company”. The Coinbase Custody is a wholly owned subsidy of the Coinbase Global Inc. As a part of the recent approval, Coinbase Trust can provide custody services for Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), XRP (XRP), Ethereum Classic (ETC), and Bitcoin Cash (BCH).

During this conference, Biancamano also said that they are trying to follow their clients’ assets.

“We do talk to our clients who are interested in doing this and we are looking at this very closely. But we are not putting a sign that we are opening for business. That said, we are a blockchain-friendly firm; we are very involved in the vertical.”

He added:

“It’s not just about the current cryptocurrency; it’s also about tokenization and digitalization of traditional assets too.”

State Street has shown a growing interest in the world of blockchain technologies. In fact, Biancamano is a crucial tool in State Street’s decision to adapt to this new trend. According to American Banker, one of the key functions of Biancamano in State Street is precisely the development of products and services based on blockchain.

One of the key hurdles to institutional players entering the cryptocurrency space is the lack of safe and secure custody solutions.

Several cryptocurrency startups are working to introduce robust custody solutions and plug the bottlenecks stopping institutional entry. Smaller retail investors often use offline, cold storage solutions to store digital assets securely. However, the same solution is not suitable for hedge funds and family offices.

To store funds worth more than $150 in assets, private funds are required to have a third-party like a bank acting as a custodian. The custodians are responsible for managing the cryptographic “private keys” allowing customers safe access to their assets holding.

Banking Giant State Street Acknowledges Clients’ High Interest for Crypto Custody

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