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State Street, a leading global financial services provider, has partnered with Taurus, a Swiss-based digital asset infrastructure provider, to advance its cryptocurrency custody and tokenization capabilities. According to the announcement, the move marks a significant step in State Streetās journey into the digital asset space. The bank positions itself to offer tokenization services and, eventually, digital asset custody.Ā
State Street Plans to Include Crypto Custody Services
State Street plans to begin tokenizing assets through its collaboration with Taurus, with the bank set to announce its first tokenization client shortly after going live. The tokenization process involves converting physical or traditional financial assets into digital tokens that can be traded and managed on blockchain platforms.Ā
While the bank is moving forward with tokenization, its digital asset custody services remain on hold pending favorable regulatory developments in the United States. Specifically, State StreetĀ
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has been a prominent critic of the SECās Staff Accounting Bulletin (SAB) 121, which imposes stringent capital requirements on banks seeking to hold cryptocurrency.Ā
Under SAB 121, banks must maintain substantial capital reserves to account for the perceived risks associated with holding digital assets. This regulation has created significant challenges for financial institutions, potentially deterring them from entering the crypto custody market. As such, State Street has called for a revision of SAB 121, arguing that the rule burdens banks and stifles innovation in the digital asset space.
State Street to Launch New Crypto ETFs
Recall that two months ago, State Street Global Advisors (SSGA) and Galaxy Digital, a crypto investment firm, planned to introduce a new line of crypto-based exchange-traded funds (ETFs). In their joint announcements, both firms noted the rising demand for digital asset exposure from institutional and retail investors alike.
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According to a new filing with the U.S. Securities and Exchange Commission (SEC), the two have proposed the SPDR Galaxy Digital Asset Ecosystem ETF. It intends to invest in a diverse array of publicly traded companies within the crypto sector, including exchanges, mining firms, hardware wallet providers, and crypto-focused venture capital firms, both domestically and internationally.
Additionally, the fund plans to incorporate investments in futures and spot ETF products, broadening its scope and potential impact on the market.
Germany Bank to Offer Crypto Custody Services
In April, Landesbank Baden-Wűrttemberg, the largest federal bank in Germany affirmed its position to introduce cryptocurrency custody services in the latter half of 2024. Collaborating with Austriaās Bitpanda cryptocurrency exchange, the bank will cater to the growing demand for digital asset custody among its institutional clients.
Jűrgen Harengel, managing director of corporate banking at the bank, highlighted the increasing interest from corporate customers in digital assets, prompting the bank to venture into crypto custody solutions. Notably, this move by Landesbank Baden-Wűrttemnberg reflects a broader trend among banks toward embracing cryptocurrency services.
