State Street, the second-oldest bank in the U.S. and with $3.1 trillion in assets under management, has signed up to use a new bank-grade trading platform for digital assets. The platform is set to go live mid-year.
Announced Thursday, State Street’s Currenex trading technology arm is working with London-based Pure Digital, infrastructure provider to the foreign exchange trading world, to create an institution-focused digital currency trading platform.
The two companies said they plan to further explore the digital currency trading space.
“Currenex is thrilled to leverage our experience and expertise in the FX and digital asset trading marketplace to provide Pure Digital with robust technology and infrastructure for this exciting digital currency trading initiative,” David Newns, the global head of Execution Services for State Street Global Markets, said in a statement.
Asked if State Street would be using the platform to do its own crypto trading, Lauren Kiley, CEO of Pure Digital, told CoinDesk over the phone, “That is the intention. State Street is one of the many banks that will be using this platform and we are looking at midway through 2021, although no date is set.” State Street subsequently confirmed it plans on using the platform.
Institutions appear to be driving the current crypto bull run, a key difference from the retail-driven expansion of the space back in 2017. Big banks including BNY Mellon, Goldman Sachs and Morgan Stanley are now making moves, and eyes have been on State Street, as one of the biggest U.S. custody providers and trading operations, to see when/if it would move into crypto.
“The digital currency world needs to grow up and mature,” Campbell Adams, founder of Pure Digital, said in an interview, adding:
“It needs large-balance financial institutions involved in the manufacturing process of price. The primary market doesn't really exist. There's a lot of disparate exchanges out there with different rules of engagement and systems. And this manifests itself in very fragmented market data.”
The plan is to transpose FX infrastructure to the crypto space via a bank-led consortium, and a platform that includes FX-industry standard APIs and best execution, Kiley said.
“State Street has agreed to explore the digital asset space trading space with us, and is also working with us on the tech,” Kiley told CoinDesk in an interview. “We’ve got a couple of banks that have signed with us and several others in the pipeline.”
Unlike a crypto exchange, Pure Digital is building an over-the-counter (OTC) offering with bilateral credit lines and full transparency, so that top-tier banks can see exactly with whom they’re dealing and can turn on and off counterparties as they choose, Kiley added.
“All these banks are waking up to crypto and can’t ignore it anymore, “ Kiley said. “Either they find a way to get involved and provide services to meet client demand or they will start to lose relevancy over time.”
UPDATE (April 8, 8:45 UTC): Adds attribution for State Street’s planned use of the platform, clarifies that timing of State Street’s use of it is yet unknown.
UPDATE (April 8, 9:15 UTC): Adds confirmation from State Street that it plans to use platform.
UPDATE (April 8, 12:35 UTC): Corrects fifth paragraph to say the quote was from a phone call, not an email. An editing error was to blame.