The intention is to add tokenization and digital custody support to the custodian’s fund administration and accounting capabilities for digital assets.
Taurus SA logo
State Street Corp. is bolstering its digital asset solutions business via an agreement with Taurus SA, a digital asset infrastructure provider, in response to institutional interest in digital assets that’s “at an all-time high,” according to the Boston-based custodian bank.
The collaboration will add tokenization and digital custody services support to the custodian’s currently available fund administration and accounting capabilities for digital assets, officials say.
A specialist targeting large financial services institutions, Taurus offers integrated, custody, tokenization, and node-management solutions that will help State Street “automate the issuance and servicing of digital assets, including digital securities and fund management vehicles, in accordance with applicable institutional standards” and regulation, according to State Street.
The digital custody services that Taurus will deliver to State Street will be separate from State Street’s current securities custody operations infrastructure.
“State Street expects that it will operate the Taurus software to coexist with State Street’s traditional systems in an integrated manner,” a State Street spokesperson tells FTF News.
While the new system will be separate, there will be links to incumbent systems.
“We currently expect that there will be upstream and downstream links to traditional systems for analog assets via APIs [application programming interfaces],” the spokesperson says.
The services to come will need regulatory approval.
“Based on the details of a particular service offering, State Street will seek necessary regulatory approvals from relevant prudential and functional regulators in the United States as well as regulators in other jurisdictions in which we may seek to offer or provide digital asset services,” a State Street spokesperson tells FTF News.
Donna Milrod
State Street will be using Taurus-PROTECT, Taurus-CAPITAL, “which streamlines the process of creating and managing tokenized assets throughout their lifecycle,” and Taurus-EXPLORER, “which provides blockchain connectivity to dozens of different blockchain protocols,” according to State Street officials.
“The collaboration with Taurus underscores our ongoing commitment to further establishing ourselves as leaders in this growing asset class, and this important announcement only enhances our ambition to deliver to our clients an amazing digital asset experience,” says Donna Milrod, executive vice president, chief product officer, and head of State Street Digital Asset Solutions, in a prepared statement.
This development effort is in line with growing competition among key firms in financial services to provide digital custody services:
- For instance, Prometheum Ember Capital just announced that it will offer custodian support for three digital asset securities — Ethereum’s ether (ETH) token, Uniswap (UNI), and Arbitrum (ARB) — through its custodial platform. Prometheum Capital officials say the firm intends to fully launch its custodial services to institutional investors later this year. The firm, a subsidiary of Prometheum Inc., is a FINRA member and SEC-registered special purpose broker-dealer for digital assets;
- In addition, inter-dealer broker Cantor Fitzgerald has plans to launch a Bitcoin financing business in an effort to help investors leverage their Bitcoin. The firm will spend $2 billion for initial financing and plans to “substantially grow the operation,” according to the initial announcement from. Cantor Fitzgerald will partner with “select Bitcoin custodians;” and
- CACEIS, an asset servicing provider based in Montrouge, Île-de-France, has launched its Digital Assets business line, making it the first European asset servicing group to do so, officials say. The launch will bolster CACEIS’s digital strategy and help it meet growing demand from investment management firms and institutional investors, officials say.
As firms develop custody services, two camps are emerging in terms of digital assets, according to an FTF News Focus Special Report: Digital Assets Reshape Custody, published earlier this year.
Justin Chapman
“One is public blockchain cryptocurrency, and then there’s everything else,” says Justin Chapman, global head of digital assets and financial markets at custodian bank Northern Trust, in the special report. “There’s a pretty big void between those two.”
For the public blockchain side of the market, where cryptocurrencies like Bitcoin and Ether live, custody has been largely dominated by crypto-native players, many of which have origins in IT or cybersecurity rather than banking, according to David Easthope, senior analyst with Coalition Greenwich, a market research firm.
But, as Easthope notes in the report, traditional custodians are increasingly providing custody to institutional clients on private permissioned distributed ledger networks, where financial firms are creating securities and financial instruments designed to take advantage of the potential efficiencies of distributed ledger technology (DLT).
A major custodian bank, State Street Corp. offers investment servicing, investment management, and investment research and trading. The firm has $44.3 trillion in assets under custody and/or administration, and $4.4 trillion in assets under management as of June 30, 2024, officials say.
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