State Street (STT) to Develop & Launch Digital Custody Offering
State Street Corporation’s STT digital division, State Street Digital, has entered a licensing agreement with Copper.co to develop and launch an institutional-grade digital asset custody product, subject to regulatory approval. Based in London, Copper provides institutional digital asset custody and trading infrastructure.
By offering custody, trading and settlement solutions across several crypto-assets and exchange, Copper provides a gateway into the crypto asset space for institutional investors.
Copper provides flexible solutions for institutional investors that can adapt to the changing crypto-asset space. It allows for greater transparency and control for asset managers.
Per the agreement, State Street Digital will leverage Copper’s technology to develop and launch an institutional-grade digital custody offering, wherein clients can store and settle their digital assets within a secure environment operated by State Street.
Nadine Chakar, the head of State Street Digital, stated, “As institutional investors’ interest in digital assets continues to grow, we are building the financial infrastructure needed to support our clients’ allocations to this new asset class. State Street Digital’s mission continues to focus on putting the right tools in place so we can provide clients with solutions to support their traditional, as well as digital assets needs.”
Chakar added, “Today’s exciting announcement will only enhance our ambition to deliver to our clients an amazing digital experience. We look forward to collaborating with the team at Copper as State Street Digital continues to grow.”
The head of State Street Digital’s digital custody, Swen Werner, said, “As the digital asset market continues to evolve, this collaboration will help our firm to expand our product offering and roadmap.”
Sabrina Wilson, the COO of Copper, said, “That State Street, one of the world’s largest custodians, is creating a new digital asset service is a hugely important development for institutional engagement in this new asset class. We are proud to be part of State Street’s goal to lead the way in the transformation of financial infrastructure.”
Over the past six months, shares of STT have lost 5.4% compared with a 9.3% decline recorded by the industry.
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Currently, State Street carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rising Competition in the Digital Asset Space
Until July 2020, the Office of the Comptroller of the Currency did not grant permission to banks in the United States to hold cryptocurrencies. The amendment post-July gave banks the go-ahead to begin exploring cryptocurrency operations.
A few years ago, banks were not that interested in the crypto and digital asset space. But now, after witnessing an increase in demand for the emerging market, banks and financial institutions are embracing cryptocurrencies.
JPMorgan Chase JPM decided to make a “strategic investment” in TRM Labs, a leader in blockchain intelligence. JPM said that it would invest in the blockchain analysis firm’s crypto compliance and risk management technology.
The Wall Street giant also announced that it opened a virtual lounge named “Onyx lounge” in Decentraland (a virtual world based on blockchain technology), thus, becoming the first bank in the United States to enter the metaverse.
JPM has been undertaking other initiatives as well to expand its presence in the crypto markets. In July 2021, the company became the first major bank in the United States to allow its financial advisors to give all its wealth-management clients access to cryptocurrency funds. Next month, it came to light that JPMorgan was offering its Private Bank wealth management customers access to an in-house passively managed bitcoin fund. JPM even launched its own digital currency, JPM Coin.
Likewise, BlackRock BLK started planning to offer crypto trading services to its investor clients.
BLK, the world’s largest asset manager, wants to enter the crypto space with “client support trading and then with their own credit facility.” This means that BlackRock’s clients will be able to borrow from investment managers by pledging crypto assets as collateral.
BlackRock, which currently manages more than $10 trillion in assets for institutions, will probably give its clients (including public pension schemes, endowments and sovereign wealth funds) access to the crypto space through its integrated investment management platform Aladdin.
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