State Street creates a division dedicated to cryptocurrencies
State Street Financial Center building, which houses the company’s headquarters, in Boston, Massachusetts.
Brent Lewin | Bloomberg | Getty Images
State Street is creating a dedicated digital finance division, which will include cryptocurrency, central bank digital currency, blockchain technology and tokenization, he announced Thursday morning.
State Street Digital will be integrated with its proprietary electronic trading platform, which the bank plans to develop into a platform capable of supporting crypto assets as well as other asset classes.
“We see digital assets as one of the most important forces impacting our industry over the next five years,” Company President and CEO Ron O’Hanley said in a statement Thursday, adding that “digital assets are quickly integrating into the existing framework of financial services” and the company wants to be ready to serve its customers as their appetites increase.
While institutional interest in bitcoin fueled its latest bull run, the largest cryptocurrency by market cap carries several risks and skeptics are still hesitant to start investing in it. Among them, cryptocurrencies and the companies providing services around them are largely unregulated, and many investors could look for traditional depositories or consulting platforms to start supporting them before allocating them.
Additionally, some investors are keen for the Securities and Exchange Commission to approve a bitcoin ETF, but this is unlikely to happen this year. Speaking to CNBC’s Bob Pisani on Wednesday, SEC Chairman Gary Gensler repeated comments that investors in crypto markets do not have all the protections they have in the stock markets.
State Street, which manages $ 3.6 trillion in assets under management and $ 40.3 trillion in assets under custody, is the second of the top five global custodians to introduce a service for digital assets. BNY Mellon also plans to offer crypto asset services for customers this year.
Nadine Chakar, Head of Global Markets at State Street, will lead the division and report to COO Lou Maiuri.
The bank also said the division plans to create new liquidity platforms for our clients and investors. Earlier this year, he said he loaned his foreign exchange technology to a start-up called Pure Digital, an interbank digital currency trading platform that aims to be the go-to crypto trading platform for institutions.