State Street is creating a dedicated cryptocurrency division

State Street Financial Center building, which houses the company’s headquarters, in Boston, Massachusetts.
Brent Lewin | Bloomberg | Getty Images

State Street is creating a division dedicated to digital finance, which will comprise cryptocurrency, central bank digital currency, blockchain technology and tokenization, it announced Thursday morning.

State Street Digital will be integrated with its proprietary electronic trading platform, which the bank plans to develop into one that can support crypto assets as well as other asset classes.

“We see digital assets as one of the most significant forces impacting our industry over the next five years,” the company’s chairman and CEO Ron O’Hanley said in a statement Thursday, adding that “digital assets are quickly becoming integrated into the existing framework of financial services” and that the company wants to be prepared to serve clients as their appetite increases.

While institutional interest in bitcoin has fueled its most recent bull run, the largest cryptocurrency by market cap comes with several risks and still has skeptics wary to begin investing in it. Among them, cryptocurrencies and the companies providing services around them are largely unregulated, and many investors could be looking for traditional custodians or advisory platforms to begin supporting them before allocating.

Further, some investors are eager for the Securities and Exchange Commission to approve a bitcoin ETF, but that’s unlikely to happen this year. Speaking with CNBC’s Bob Pisani on Wednesday, SEC chair Gary Gensler reiterated comments that investors in crypto markets don’t have the full protections they have in the equity markets.

State Street, which has $3.6 trillion assets under management and $40.3 trillion in assets under custody, is the second of the five major global custodians introduce a service for digital assets. BNY Mellon also plans to offer crypto asset services for customers this year.

Nadine Chakar, head of global markets at State Street, will lead the division and report to chief operating officer Lou Maiuri.

The bank also said the division plans to create new liquidity venues for our clients and investors. Earlier this year it said it has been lending its foreign exchange technology to a start-up called Pure Digital, an interbank digital currency trading venue that aims to be the go-to crypto trading platform for institutions.

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