Global custody bank State Street, which oversees $44.3 trillion in assets, has partnered with Swiss firm Taurus to provide digital asset services, with an initial focus on tokenization. The move is seen as a preparatory step for offering crypto custody services once the U.S. regulatory landscape becomes more favorable.
State Street’s first step will be launching tokenized versions of traditional assets, with plans to onboard its first client soon after, according to the bank. Although digital asset custody is a natural extension for the bank, the restrictive U.S. regulatory environment—specifically the Securities and Exchange Commission’s (SEC) proposed Staff Accounting Bulletin 121 (SAB 121)—poses significant challenges. SAB 121 would require banks holding crypto assets to maintain substantial capital reserves, making it difficult for U.S. institutions to offer these services.
Donna Milrod, State Street’s chief product officer and head of Digital Asset Solutions, emphasized the bank’s push for regulatory changes, particularly regarding SAB 121. “While we’re starting with tokenization, that’s not where we’re ending,” Milrod said in an interview. “As soon as U.S. regulations help us out, we will be providing digital custody services as well. We know how to be a custodian, but these are not our assets—they’re off-balance sheet.”
Taurus co-founder Lamine Brahimi highlighted the benefits of tokenization, such as 24/7 trading and enhanced collateral management. He also pointed out the lag in the U.S. market due to regulatory restrictions compared to Europe. “I’m confident this partnership with State Street will be a positive signal for U.S. financial markets,” Brahimi said.
State Street has been involved in blockchain and digital assets for years, including a recent partnership with crypto custody firm Copper, which has since pivoted away from custody to focus on its ClearLoop settlement system.
