State Street Bank Launches Cryptocurrency Division

State Street, a U.S. custody bank that oversees about $40 trillion in assets, has launched a cryptocurrency division.

The new unit, State Street Digital, will be led by executive vice president Nadine Chakar, who will report to Lou Maiuri, the bank's chief operating officer, State Street said in a press release Thursday.

State Street said it is expanding its digital reach to include crypto, central bank digital currency, blockchain and tokenization, and will upgrade its existing GlobalLink platform into a multi-asset digital trading system.

In April, CoinDesk reported that State Street was working on a new trading platform for digital assets set to go live midyear through a partnership between the bank’s Currenex trading technology provider and London-based Pure Digital, which develops infrastructure for foreign-exchange trading plaforms. 

But at that time, State Street representatives played down the possibility that the bank would use the platform to trade crypto.

That seems to have changed.

“Digital assets are quickly becoming integrated into the existing framework of financial services, and it is critical we have the tools in place to provide our clients with solutions for both their traditional investment needs as well as their increased digital needs,” State Street CEO Ron O’Hanley said in the press release.

State Street had been edging closer to the crypto market. In April, the bank was appointed as the administrator of a planned bitcoin-backed exchange-traded note (ETN) initiated by Iconic Funds BTC ETN GmbH, a unit of Iconic Funds GmbH, a holding company that manages crypto investments.

Before that, State Street was appointed as the fund administrator and transfer agent of the VanEck Bitcoin Trust, an exchange-traded fund whose launch depends on whether the U.S. Securities and Exchange Commission (SEC) approves crypto ETFs.

A source in the crypto custody market said State Street is playing catch-up.

“When BNY Mellon entered the crypto custody space, that pretty much forced State Street to get involved,” the source said.

In February, BNY Mellon announced it is starting a digital custody unit later this year.