State Street Partners with Taurus to Enhance Digital Asset Services

State Street Partners with Taurus for Digital Asset Services

State Street, a prominent global custody bank managing an impressive $44.3 trillion in assets, has made a strategic decision to collaborate with Taurus, a specialist in cryptocurrency custody and tokenization. This partnership comes as State Street anticipates a more favorable regulatory environment for digital assets in the United States.

The bank’s initial efforts will focus on launching tokenized versions of traditional assets, with plans to announce their first client shortly. This development underscores State Street’s commitment to integrating digital asset services into its offerings.

As a custody specialist, State Street is well-positioned to oversee digital assets. However, U.S. banks have encountered significant challenges due to the Securities and Exchange Commission’s (SEC) proposed Staff Accounting Bulletin 121 (SAB 121). This regulation sets forth restrictions on institutions wishing to hold customer crypto assets, creating a complex landscape for digital asset management.

Donna Milrod, State Street’s chief product officer and head of Digital Asset Solutions, has been vocal about the need for reforming SAB 121. She highlighted that the current regulations could compel banks aiming to custody crypto assets to maintain excessive capital reserves to mitigate perceived risks. “While we’re starting with tokenization, that’s not our endpoint,” Milrod stated in a recent interview. “As soon as the regulatory landscape in the U.S. becomes more accommodating, we will expand our offerings to include comprehensive digital custody services. Our expertise lies in being a custodian, and we manage these assets off-balance sheet, ensuring they’re not reflected on our balance sheet.”

Lamine Brahimi, the co-founder and managing partner of Taurus, emphasized the numerous advantages of tokenization, including the potential for 24/7 trading and enhanced collateral management. He echoed Milrod’s sentiments regarding the need for improved regulations in the U.S., suggesting that the partnership with State Street could act as a catalyst for positive change in U.S. financial markets. “I’m confident that this collaboration with State Street will send a positive signal to the financial markets in the U.S., which have been lagging behind their European counterparts due to SAB 121,” Brahimi noted during an interview.

State Street has a rich history of engagement with blockchain technology and digital assets. Its recent endeavors included collaboration with crypto custody firm Copper, although Copper has since shifted its focus from custody services to its innovative ClearLoop settlement system.