For now, on the crypto front, the firm will continue to offer its fund administration services and offer clients a white label software service that allows clients to trade across various liquidity venues. The list of clients interested in these products appears to be extensive. “We are building and will deploy at the right time,” Chakar said. “We don’t trade on our balance sheet, it’s a white-labeled solution,” Chakar described.
In a sense, State Street’s new unit — staffed by 400 employees — continues much of its previous work in the digital asset market. The firm has partnered with a number of companies offering bitcoin products, serving as the administrator for a planned bitcoin ETF set to list on the Frankfurt Stock Exchange. It is also the appointed transfer agent for VanEck’s Bitcoin Trust. “The objective is to evolve the platform into a multi-asset platform to support crypto assets among other asset classes,” O’Hanley said.
Still, the firm has historically shied away from talking about entering the bitcoin custody market, which has seen interest from firms ranging from Citigroup to JPMorgan. Chakar told The Block that custody is on the firm’s radar and it would launch such a product, pending the necessary regulatory approval. “It’s a real sign of commitment from our CEO,” Chakar said, referring to Ron O’Hanley, who in a statement said that digital assets are becoming an important part of the broader financial services industry.
“We’re still at this stage with clients dipping their toes in the water and they are desperate for knowledge,” Chakar added. Still, the firm might be playing catch-up, as reported by CoinDesk. Competitors like BNYMellon have already announced cryptocurrency units, while State Street has yet to publicize a target date for such a launch. There’s also interest from corporates, which are considering allocating to bitcoin on their balance sheet, following in the footsteps of electric chief executives like Elon Musk at Tesla and Michael Saylor at MicroStrategy.
“There are new cryptocurrency types of funds that are launching, asset managers looking at maybe launching index funds. We are also seeing endowments and foundations looking for assistance as they are getting grants and pledges in crypto.” He went on to say:
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