Boston-based State Street Corp. announced December 17, 2020 that it’s partnering with cryptocurrency exchange and custodian Gemini Trust. This is due to the launch of a crypto custody pilot program by State Street. Institutions that store their cryptocurrency with Gemini Custody will have the related reporting and holdings information provided by State Street.
In particular, investors will be able to consolidate the reporting of digital assets stored at Gemini with the traditional assets managed by State Street.
At first, two digital assets will be supported at launch: Bitcoin BTC and Ethereum ETH. Gemini CEO Tyler Winklevoss says the pilot “is extensible to other digital assets, such as tokenized securities, in the future.”
“With trillions of dollars in assets under management, State Street will never compromise on security – and neither will we,” Winklevoss said. “Traditional investors will more seamlessly be able to allocate capital in their portfolio to digital assets through trusted and regulated financial institutions — helping us build a better bridge to the future of money.”
State Street: growing demand for crypto custody
Commenting on the development, Ralph Achkar, managing director of digital product development and innovation at State Street, said: “There is small, but growing demand from our clients for solutions of this type and many technical, operational, regulatory, and legal considerations to be addressed. That is why we have opted for an open model and started a pilot with Gemini as an established, regulated player in the digital asset space.”
Boston-based State Street is one of the oldest financial institutions in the United States. Furthermore, it is one of the largest custodians in the world, with over $32 trillion in assets under custody.
The announcement comes as State Street has recently shifted its focus to integrating blockchain technology; besides they will now focus more on tokenizing existing securities and other financial instruments. The company said 38% of its clients intend to increase their investment in digital assets over the course of 2020; this is one reason for the deviation.
As CoinDesk reported referencing a source, State Street was changing its strategy for blockchain use: “They are moving away from this giant in-house DLT initiative. They are more focused on digital assets, stablecoins, custody, and the USC initiative.”
Earlier this year, Gemini also announced plans to apply for a broker-dealer license from FINRA. The license allows for the buying and selling of securities on behalf of other entities. This means Gemini could be taking steps toward facilitating the trading of security tokens.
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