226-year-old State Street, the second oldest U.S. Bank (after Bank of New York) and the world's largest custodian with approximately $33.12 trillion under custody and administration, says that its clients have "a very high level of interest" in cryptoassets.
On Thursday (29 November 2018), Jay Biancamano, a Managing Director for Digital Product Development and Innovation at State Street (in Princeton, New Jersey), was speaking as part of a panel called "Crypto Custody: The Key to Unlocking Institutional Capital" at American Banker's two-day "Block|FS" conference (29–30 November 2018) in New York City.
Biancamano, who at State Street is "focused on innovating new products and services based on cognitive and blockchain technologies, stated that among State Street's clients there was "a very high level of interest" in cryptoassets, but there was no need for his firm just yet to provide a crypto cutody solution for institutional investors since there was "no sense of urgency" on the part of their clients "to move into these assets right now."
When asked whether the bank was building a crypto custody solution or acquire a firm that has already built such a solution, he said:
“We follow our clients’ assets. We do talk to our clients who are interested in doing this and we are looking at this very closely. But we are not putting a sign that we are opening for business. That said, we are a blockchain-friendly firm; we are very involved in the vertical.”
He also said that crypto custody was not just about cryptocurrencies:
"It’s not just about the current cryptocurrency; it’s also about tokenization and digitalization of traditional assets too.
On 25 January 2018, according to a report in Financial News, Ralph Achkar, another Managing Director for Digital Product Development and Innovation (for Europe, the Middle East and Africa) at State Street, this time one based in London, said that "although large investors were interested in the new assets," they were hampered by "market infrastructure, which lacks appropriate trading and post-trading arrangements." He went on to say:
"We are actively looking at servicing digital assets, like coins and their derived assets, based on the demand we are seeing from our institutional investors. As the asset base of our clients expands, we follow suit."
"I am spending a significant amount of my own time and my team’s effort in creating and managing blockchain technologies. So, to that effect, we analysed almost every single blockchain technology out there over the course of the last four to five years, and we were very early in engaging in this space. As a result of that... we have a significant portion of our team that are not only contributors, but maintainers of these projects in the open source community.
... we are creating some of our core back-end capabilities on top of these technologies, which we will start to bring to market over the course of the next 12 to 24 months. And, as we start to do that, you will start to see an evolutionary effect on the types of services we will be able to offer to our clients...
In short, there is a very significant investment that we are making in this space. But, to be very clear, it is completely different from anything that the current cryptocurrency market does and which operates in an anonymous network. What we are doing is creating and operating on top of a known network of participants."
Featured Image Courtesy of State Street Corporation