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State Street, the second-oldest bank in the United States with $40.3 trillion under custody at the end of March, is setting up a new digital division to keep up with the growing demand for cryptocurrencies despite the lack of regulatory clarity. “We are at a tipping point now where this is moving fast,” Nadine Chakar, who will head State Street Digital, told FT.
“We are getting calls from endowments and foundations that are getting donations in crypto and saying what do we do with this? We are seeing companies that are thinking of adding crypto to their balance sheets.”
The company executive further emphasized that the bank’s digital opportunity goes beyond cryptos and includes using blockchain technology to make the system more efficient. “We are turning the industry upside down,” she said. This move came just weeks after the Boston-based bank was appointed by Iconic Funds to serve as the administrator of a bitcoin-backed exchange-traded note listed on the Frankfurt Stock Exchange. State Street, whose own fund management arm has $3.6tn under custody, is partnering with academic institutions and regulators in preparation for the launch of the digital unit.
“We will support everything in crypto services that we are allowed to support from a regulatory perspective. The level of communications back and forth with our regulators is intense.”
The bank is also keeping an eye on the Securities and Exchange Commission (SEC)’s judgment on a proposed Bitcoin ETF. Several companies have filed for an ETF, but there are yet to be approved one in the US, while Canada has several Bitcoin and Ethereum ETF approved and trading on the exchanges. While State Street had “a lot of clients looking to launch crypto ETFs,” Chakar said it may be some time before the SEC acts on pending applications.
“If they do need more time to get it right, and provide the industry with the clarity we need, we will continue to work with our clients,” she said. “In this case, patience is a virtue. We will continue to be patient.”