State Street’s New Digital Asset Strategy
State Street, a leading global custodian with $44.3 trillion in assets under management, has selected Taurus, a cryptocurrency custody and tokenization specialist, to advance its digital asset services. The partnership comes as the bank prepares to navigate U.S. regulatory challenges by focusing on tokenization rather than direct cryptocurrency custody.
Initial focus on tokenization
The initial phase will focus on creating tokenized versions of existing assets, with the first client expected to be announced shortly after the service launches. Tokenization offers benefits such as 24/7 trading and optimized collateral management, and aims to fill the gap in digital asset services while waiting for a more favorable regulatory environment.
Regulatory Issues and Advocacy
State Street has raised concerns about the SEC’s proposed Staff Accounting Bulletin 121 (SAB 121), which would impose significant capital requirements on banks that hold customer crypto assets. The bank has argued for changes to SAB 121 to reduce this burden. Donna Milrod, State Street’s chief product officer and head of digital asset solutions, emphasized that while the company is currently focused on tokenization, it ultimately aims to offer digital custody services as well.
Taurus’s Role and Industrial Impact
Swiss-based Taurus will support State Street in this effort. Co-founder and Managing Partner Lamine Brahimi highlighted the potential positive impact of this partnership on the U.S. financial markets, which currently lag behind European markets due to regulatory constraints.
Previous involvement and future prospects
State Street has a history of engagement with blockchain technology, having previously worked with cryptocurrency custodian Copper. However, Copper has since shifted its focus to its ClearLoop settlement system, highlighting the evolving nature of its digital asset services.
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