State Street Bank is the latest to announce a new unit, State Street Digital, that will expand digital reach to include crypto, central bank digital currency, blockchain and tokenization. State Street also made an almost identical announcement yesterday and of course, FIS in May announced it would enable its banks to buy, hold, and sell crypto.
These are only the most recent financial institutions to make this announcement, others made similar announcements some time ago. Anchorage Digital is making a business out of providing crypto custodial services and claims to be the first federally-chartered digital asset bank in history.
Perhaps most interesting is that several of these announcements indicate the intent to support central bank digital currency (CBDC). I’ll go out on a limb and say that won’t be the digital Yuan or the Bermuda Sand Dollar, so it would appear the US Government is telegraphing its plans to banks well before it tells us.
The MIT CBDC research collaboration with the Federal Reserve Bank of Boston should be published as soon as next month and rumor has it a US CBDC could be in pilot by late 2022 or early 2023.
Anyone that thinks crypto isn’t here to stay better rethink that position:
“In April, CoinDesk reported that State Street was working on a new trading platform for digital assets set to go live midyear through a partnership between the bank’s Currenex trading technology provider and London-based Pure Digital, which develops infrastructure for foreign-exchange trading plaforms.
But at that time, State Street representatives played down the possibility that the bank would use the platform to trade crypto.
That seems to have changed.
“Digital assets are quickly becoming integrated into the existing framework of financial services, and it is critical we have the tools in place to provide our clients with solutions for both their traditional investment needs as well as their increased digital needs,” State Street CEO Ron O’Hanley said in the press release.
State Street had been edging closer to the crypto market. In April, the bank was appointed as the administrator of a planned bitcoin-backed exchange-traded note (ETN) initiated by Iconic Funds BTC (-0.68%) ETN GmbH, a unit of Iconic Funds GmbH, a holding company that manages crypto investments.
Before that, State Street was appointed as the fund administrator and transfer agent of the VanEck Bitcoin Trust, an exchange-traded fund whose launch depends on whether the U.S. Securities and Exchange Commission (SEC) approves crypto ETFs.
A source in the crypto custody market said State Street is playing catch-up.
“When BNY Mellon entered the crypto custody space, that pretty much forced State Street to get involved,” the source said.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
