Ben Strack

The Depository Trust and Clearing Corporation (DTCC) closed its deal on Monday to acquire Securrency as traditional finance-crypto integrations continue to emerge.&nbsp;



The purchase was first announced in October. It is part of a bid to help accelerate the expected greater institutional use of on-chain assets amid an industry-wide tokenization push.



DTCC CEO Frank La Salla said in a Monday statement that the firm seeks to build “a robust digital infrastructure that protects the safety and soundness of financial markets and delivers on the enormous promise and potential of institutional DeFi in the coming years.”



Read more: <a href="https://blockworks.co/news/defi-acquisition-dtcc-securrency">DTCC tees up institutional DeFi push with Securrency buy</a>



The financial market infrastructure giant offers clearing and settlement services — processing trillions of dollars in securities transactions daily, as stated on its website. Securrency is a blockchain-based financial and regulatory technology developer.&nbsp;



The acquisition — made for $50 million — formalizes DTCC’s current blockchain pilot efforts and is expected to deliver an institutional post-trade platform that supports most digital asset products, according to Elliot Chun, a partner at advisory firm Architect Partners. This includes existing securities wrapped in on-chain assets, he added.



“DTCC has been forward-thinking in its use of blockchain, and the cost and operational efficiencies are well-suited for DTCC to impact the entire securities industry,” Chun noted in an October research <a href="https://architectpartners.com/dtcc-acquires-securrency/">note</a>.&nbsp;



The acquiring firm — renamed as DTCC Digital Assets — is set to be led by Nadine Chakar. The executive <a href="https://blockworks.co/news/ex-state-street-digital-head-to-lead-regtech-blockchain-startup">joined the firm from State Street</a> in January.



A <a href="https://blockworks.co/tag/dtcc">DTCC</a> spokesperson did not immediately comment on the combined firm’s next steps.&nbsp;



Securrency has been in the thick of tokenization efforts seen in recent years as traditional finance giants have looked for ways to get more involved in the blockchain and crypto segments.&nbsp;



Chakar said in January the financial services industry was at “a critical tipping point as it <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">tokenizes regulated real-world assets</a> and automates legacy financial processes using the power of blockchain technology.”



Total value locked (TVL) in protocols that involve real-world assets is at nearly $5.8 billion, according to DefiLlama <a href="https://defillama.com/categories">data</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/brazil-drives-tradfi-crypto-convergence">How a Brazilian banking giant’s latest move reflects the ongoing TradFi-crypto convergence</a>



Securrency helped asset manager WisdomTree <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar">launch “blockchain-enabled” funds</a> that keep a secondary record of share ownership on the Stellar or Ethereum blockchains. DTCC said in an October news release it would license Securrency’s technology to firms — similar to how WisdomTree uses Securrency’s software as infrastructure for <a href="https://blockworks.co/news/wisdomtree-prime-app-new-features-blockchain-enabled">its consumer app that offers tokenized assets and funds</a> through digital wallets.



JPMorgan has explored various tokenization and blockchain initiatives for several years — recently <a href="https://blockworks.co/news/blackrock-barclays-jpmorgan-chase-dapp-tcn">facilitating a collateral transaction between BlackRock and Barclays</a> via a decentralized application.



Germany-based Deutsche Bank said in September it was <a href="https://blockworks.co/news/deutsche-bank-crypto-custody-tokenization">set to establish digital asset custody and tokenization services</a> through a partnership with crypto infrastructure firm Taurus.



“Tokenization has not lived up to its promise yet, and the fundamental way to move the industry forward is by having a critically important market participant make a significant investment in technology,” Chun said in his October post. “You can’t get more critical than DTCC.”&nbsp;&nbsp;



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acquisition

DTCC closes deal to buy Securrency amid TradFi-crypto integrations

Financial market infrastructure giant DTCC has inked a deal to buy Securrency as part of a planned digital assets push.&nbsp;



The deal is meant to quicken the development of a platform designed to “unlock the power of institutional DeFi,” DTCC said in a Thursday statement.



The acquisition is set to close in the next few weeks. At that point, Securrency will become DTCC Digital Assets. Securrency CEO Nadine Chakar, who joined the firm from State Street in January, will lead the new DTCC subsidiary. 



Terms of the deal were not disclosed. A DTCC spokesperson did not immediately return a request for comment. 



Read more: <a href="https://blockworks.co/news/ex-state-street-digital-head-to-lead-regtech-blockchain-startup">Ex-State Street digital head to lead RegTech blockchain startup</a>



New York-based DTCC, which offers clearing and settlement services, processes trillions of dollars in securities transactions daily, according to its website.



Securrency is a blockchain-based financial and regulatory technology developer that <a href="https://blockworks.co/news/state-street-u-s-bank-in-on-30m-securrency-raise">raised $30 million in 2021</a> from State Street, US Bank, WisdomTree Investments and others. It has worked with WisdomTree to help the asset manager <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar">launch “blockchain-enabled” funds</a> that keep a secondary record of share ownership on the Stellar or Ethereum blockchains.



“Securrency is an important strategic acquisition that will give us the technology to drive market-wide transformation by enabling end-to-end digital lifecycle processing for tokenized assets, digital currencies and other financial instruments,” DTCC CEO Frank La Salla said in a statement.



La Salla added that “this next generation of financial market infrastructure” is set to reduce settlement times, enhance regulatory oversight and improve investor experience.&nbsp;



<a href="https://blockworks.co/tag/tokenization">Tokenization</a> has been a hot topic over the past year.



BlackRock CEO Larry Fink called the tokenization of securities <a href="https://blockworks.co/news/blackrock-ceo-still-in-crypto-for-the-tech-despite-ftx-scandal">“the next generation for markets”</a> late last year. Projects and companies in recent years <a href="https://blockworks.co/news/real-world-assets-tradfi-defi-tokenization">have sought to bring physical and financial assets</a> — from debt securities to real estate properties — on-chain.



“Together, we will unlock opportunities to reimagine compliance, liquidity, efficiency and interoperability in trading real-world assets on the blockchain,” Chakar said in a statement.&nbsp;



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DTCC tees up institutional DeFi push with Securrency buy

Crypto layoffs continued apace this week as the sector remains stuck in a brutal bear market.&nbsp;



Crypto exchange Huobi plans to lay off about 20% of its staff, Reuters <a href="https://www.reuters.com/technology/crypto-exchange-huobi-lay-off-20-staff-justin-sun-2023-01-06/">reported</a> Friday. Plans are in place to shift to a “lean team” due to a tricky trading environment.&nbsp;



Blockchain analytics platform Nansen said in a <a href="https://twitter.com/nansen_ai/status/1611272809665396737">tweet</a> Friday that about $61 million of the roughly $94 million of net outflows Huobi has seen in the past week occurred in the past 24 hours.



A Huobi spokesperson did not immediately return a request for additional comment.&nbsp;



Silvergate said Thursday it would cut 200 positions, about 40% of its staff, to further slash its expenditures. The plan came as the crypto bank said its <a href="https://blockworks.co/news/silvergate-stock-plummets-45-on-major-staff-cuts-massive-withdrawals">customers pulled more than $8 billion</a> from their accounts over the course of the fourth quarter, forcing the company to sell assets at a major loss to fulfill withdrawals.&nbsp;



Donald Putnam, a managing director with mergers and acquisitions specialist Grail Partners, <a href="https://blockworks.co/news/bottom-feeders-who-would-be-interested-in-silvergate-now">told Blockworks</a> that while the cuts are “a strong move,” there is no way Silvergate can cut its way to profitability. &nbsp;



Another crypto company that has resorted to layoffs amid the tough market conditions is crypto lender Genesis.&nbsp;



The firm laid off 30% of its staff and is considering filing for bankruptcy. CoinDesk first <a href="https://www.coindesk.com/business/2023/01/05/crypto-lender-genesis-lays-off-30-more-of-its-staff/">reported</a> the steep cuts.&nbsp;



A Genesis spokesperson told Blockworks that the decision to reduce its headcount came amid “unprecedented industry challenges.”



“These measures are part of our ongoing efforts to move our business forward,” the spokesperson said. “We sincerely appreciate the hard work of our talented and dedicated team as we continue to work to identify the best outcome for Genesis’s business, clients and employees for the long-term.”



Osprey Funds has likewise instituted layoffs due to the market downturn, per two sources familiar with the matter.&nbsp;



Osprey CEO Greg King confirmed the cuts to Blockworks.&nbsp;



The executive declined to comment on the extent of the layoffs or when they transpired. One of the sources categorized the move as recent. Both sources were granted anonymity to discuss sensitive business dealings.&nbsp;&nbsp;&nbsp;&nbsp;



Osprey has several investment products that invest directly in a broad range of cryptoassets, including publicly traded trusts focused on bitcoin, polkadot and <a href="https://blockworks.co/news/osprey-funds-launches-solana-trust-amid-tokens-rally">solana</a>.&nbsp;



Executive hires



The former head of State Street’s digital finance unit is <a href="https://blockworks.co/news/ex-state-street-digital-head-to-lead-regtech-blockchain-startup">set to join</a> blockchain firm Securrency as its chief executive on Jan. 9.&nbsp;



<a href="https://www.linkedin.com/in/nchakar/">Nadine Chakar</a> began leading State Street Digital in June 2021 after the division <a href="https://blockworks.co/news/state-street-launches-digital-finance-unit-for-crypto">launched</a> as a way for the custody bank to expand its capabilities in crypto, central bank digital currencies, blockchain and tokenization.



Securrency founder Dan Doney, the firm’s previous chief executive officer, is set to continue on under the title of chief technology officer.



Zodia Custody tapped <a href="https://www.linkedin.com/in/juliansawyer/?originalSubdomain=uk">Julian Sawyer</a> to head the crypto service provider’s business.&nbsp;



A subsidiary of Standard Chartered, the company is looking to scale in 2023, it said in a statement. Zodia Custody is a trading venue and brokerage focused on digital asset markets designed for institutions.



Sawyer, Zodia’s new chief executive, previously held the same role at BitStamp from October 2020 to May 2021, according to his LinkedIn.&nbsp;



He co-founded Starling Bank in 2015 and was the company’s chief operating officer for four years. After that, he spent about a year as a managing director for crypto platform Gemini.&nbsp;



BitDAO hired ​​<a href="https://www.linkedin.com/in/arjunkrishankalsy/">Arjun Krishan Kalsy</a> as its head of ecosystem at<a href="http://mantle.xyz/"> Mantle</a>, an Ethereum layer-2 blockchain designed for hyper-scalability.



The Mantle network is owned by BitDAO, a decentralized platform built on the Ethereum blockchain. Mantle’s testnet launch is slated for this year’s first quarter, according to its website.&nbsp;



Kalsy was previously head of business development and growth at Polygon for nearly three years. There, he built relationships and secured several large deals with enterprise clients including Reddit, Instagram and Disney.&nbsp;



The UK’s National Crime Agency is seeking to hire a cryptocurrency investigator as it looks to form a specialized cryptocurrency and virtual assets team, according to <a href="https://www.civilservicejobs.service.gov.uk/csr/index.cgi?SID=b3duZXI9NTA3MDAwMCZzZWFyY2hwYWdlPTEmdXNlcnNlYXJjaGNvbnRleHQ9MjA1MjA0NzEmc2VhcmNoc29ydD1jbG9zaW5nJmpvYmxpc3Rfdmlld192YWM9MTgyODY0NCZvd25lcnR5cGU9ZmFpciZwYWdlYWN0aW9uPXZpZXd2YWNieWpvYmxpc3QmcGFnZWNsYXNzPUpvYnMmcmVxc2lnPTE2NzI4MTUyMDUtZDI0MTRhNTI4ODJkZmE5ODZjZTg5MzJkMjY4NTNhOTFjM2VjMGEyZg==">a job posting</a>.&nbsp;



The crypto unit is set to initially have five officers, Financial News <a href="https://www.fnlondon.com/articles/crypto-crime-uk-nca-job-anti-money-laundering-national-crime-agency-digital-fraud-20230104">reported</a>.&nbsp;



“The role will support existing and new investigations where specialist cryptocurrency experience is required along with taking a proactive lead in identifying targets for further development,” the posting said.



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BitDAO

Latest in Crypto Hiring: Huobi Layoffs Cap Another Week of Cuts

Former State Street head of digital finance Nadine Chakar is now set to lead blockchain startup Securrency as its CEO.&nbsp;&nbsp;



Chakar is expected to assume the role on Jan. 9. The firm&#8217;s founder Dan Doney, who was previously working as the company’s CEO, will continue as chief technology officer.



Securrency is a blockchain-based financial and regulatory technology developer. The firm has <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar" target="_blank" rel="noreferrer noopener">worked with</a> asset manager WisdomTree on its push to launch what it calls blockchain-enabled funds. Securrency says it serves as a transfer agent by maintaining a secondary record of share ownership on the Stellar or Ethereum blockchains.



WisdomTree Investments, alongside State Street, <a href="https://blockworks.co/news/state-street-u-s-bank-in-on-30m-securrency-raise" target="_blank" rel="noreferrer noopener">participated</a> in Securrency&#8217;s $30 million Series B raise in Apr. 2021.



State Street Digital <a href="https://blockworks.co/news/state-street-launches-digital-finance-unit-for-crypto" target="_blank" rel="noreferrer noopener">launched</a> in Jun. 2021 as a way for the custody bank to expand its capabilities in the crypto, central bank digital currency, blockchain and tokenization segments. 



Before leading its crypto-related efforts, Chakar became State Street&#8217;s head of global markets in 2019 after working for several years as global head of operations and data at Manulife Investment Management.



The Securrency move comes after a State Street spokesperson told Blockworks in October that Chakar was set to leave the company at the end of 2022.&nbsp;



The spokesperson added that <a href="https://www.linkedin.com/in/martinebond/" target="_blank" rel="noreferrer noopener">Martine Bond</a> — who led global markets for Europe, the Middle East and Africa, and was head of <a href="https://globallink.com" target="_blank" rel="noreferrer noopener">GlobalLink</a>, had assumed Chakar’s role at State Street on an interim basis and is still in that role.



“The financial services industry is at a critical tipping point as it tokenizes regulated real-world assets and automates legacy financial processes using the power of blockchain technology,” Chakar said in a statement. 



&#8220;As the new CEO, my priority is to accelerate the commercialization of what is in essence the digital asset intelligence and interoperability foundation for major financial institutions and the global ecosystem.&#8221;



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nadine chakar

Ex-State Street Digital Head To Lead RegTech Blockchain Startup

The SEC has OK’d nine more WisdomTree blockchain-enabled funds as the asset manager gets set to roll them out on its mobile app in the coming months.



WisdomTree’s funds are the latest step toward the asset manager’s goal to bring fixed income, equities and commodities into the digital world through funds and tokenized exposures.&nbsp;



The new products do not invest in crypto. However, the funds’ transfer agent, Securrency Transfers, maintains a secondary record of share ownership on the Stellar or Ethereum blockchains — hence “blockchain-enabled.” Securrency keeps the primary record of share ownership for the funds in “its own books-and-records,” a spokesperson told Blockworks.



Among the new offerings are funds that invest in US Treasurys. The firm has also gained approval for the WisdomTree 500 Digital Fund — its first digital fund seeking to track performance in the US equity market.



Each fund is set to be available only via the <a href="https://blockworks.co/news/wisdomtree-launching-crypto-app" target="_blank" rel="noreferrer noopener">WisdomTree Prime</a> mobile application, which is in beta testing and is on track for a national rollout next quarter.&nbsp;



End users won’t be able to verify their ownership themselves without the app, say via the Ethereum or Stellar blockchain directly. But the firm believes the secondary record provides its funds with the potential to unlock use cases for these assets.&nbsp;



Will Peck, WisdomTree’s head of digital assets, told Blockworks there may be distribution opportunities in the future, saying:



“We believe that blockchain-enabled finance has the potential to improve the investor experience through enhanced liquidity, transparency and standardization, which we aim to achieve over time, and these nine digital funds are setting the foundation as we seek to bridge the gap between traditional finance and digital finance today.”



Though Peck declined to comment on future products, he told Blockworks in an email that&nbsp;WisdomTree Prime intends to offer “a highly curated experience” for investors that brings mainstream exposures to the blockchain.&nbsp;



“With this in mind, we are continuously evaluating what types of products would complement one another and contribute to this strategically designed suite of product offerings, he added.



WisdomTree has roughly $81 billion in assets under management. A majority of those assets are in its 78 ETFs trading in the US, according to ETF.com.&nbsp;



<h3 class="wp-block-heading">WisdomTree finds crypto interesting but more into blockchain</h3>



The news comes after the firm gained SEC approval to <a href="https://blockworks.co/wisdomtree-set-to-launch-fund-with-real-world-focus" target="_blank" rel="noreferrer noopener">launch its Short-Term Treasury Digital Fund</a> in September.&nbsp;



That fund, which invests in short-term US Treasury obligations, is also set to digitize its fund share ownership record on the Ethereum or Stellar blockchains.



<a href="https://blockworks.co/news/wisdomtree-triples-down-on-future-blockchain-focus" target="_blank" rel="noreferrer noopener">WisdomTree executives said</a> during the company’s earnings call in October that blockchain-enabled digital wrappers are the future of asset management.&nbsp;



CEO Jonathan Steinberg said at the time that the company has so far spent about $20 million on its tokenization and WisdomTree Prime efforts.&nbsp;The firm, for example, is building out the app’s ability to initially allow users to transfer tokenized assets such as dollars, gold, Treasurys, bitcoin and ether.



“Crypto’s interesting, but the real opportunity is blockchain-enabled finance,” WisdomTree Chief Operating Officer Jarrett Lilien added during the call. “It’s a mistake to confuse crypto, which is a use case for the blockchain…with the broader opportunity we’re pursuing.”



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ETFs

WisdomTree’s Latest ‘Blockchain-Enabled’ Funds To Use Ethereum, Stellar

<div id="highlights-block_633364b6a6a01" class="highlights">
 <ul>
 <li>Fund’s share ownership record lives on either the Stellar or Ethereum blockchains</li>
 <li>The offering is expected to launch through WisdomTree Prime’s digital wallet application in the coming months</li>
 </ul>
 
</div>



A key narrative in the long-term bullish case for crypto adoption is the prospect of tokenizing off-chain assets to enable more efficient global markets.



In that vein, WisdomTree is set to launch a fund that digitizes its fund share ownership record on the Ethereum or Stellar blockchains as the asset manager seeks to ultimately move more traditional financial assets onto digital rails.&nbsp;&nbsp;



Regulators have approved WisdomTree’s Short-Term Treasury Digital Fund (WTSY), the firm has revealed, which seeks to track the <a href="https://www.wisdomtree.com/blog/glossary#solactive%201-3%20year%20treasury%20bond%20index" target="_blank" rel="noreferrer noopener">Solactive 1-3 Year Treasury Bond Index</a> by investing in short-term US Treasury obligations.



The fund does not invest in crypto directly. But the asset manager is betting that the offering is a first step toward bringing traditional financial assets, like US Treasury bonds, into the digital ecosystem and unlocking ways for blockchain rails to improve investor experience.



WisdomTree, with roughly $75 billion in assets under management, first <a href="https://www.sec.gov/Archives/edgar/data/1859001/000119312521136968/d156395dn1a.htm" target="_blank" rel="noreferrer noopener">filed</a> for the fund in April 2021. An open-ended registered fund under the Investment Act of 1940, WTSY is like a traditional mutual fund. Where it differs is that its transfer agent — Securrency Transfers — keeps a secondary record of the fund’s share ownership on either the Stellar or Ethereum blockchains.



Though the WisdomTree fund cannot support anonymous transactions, an investor would be able to make an approved transaction on their own and hold the record of the share in a supported blockchain wallet, Will Peck, WisdomTree’s head of digital assets, said in <a href="https://www.wisdomtree.com/blog/2022-09-26/wtsy-the-digital-fund-opportunity" target="_blank" rel="noreferrer noopener">a Monday blog post</a>.&nbsp;



Peck highlighted near-instant settlement finality around the clock and atomic settlement that a blockchain provides, as well as the code-based enforcement of rules in financial processes.&nbsp;



“These features will take time to unlock and may not come to fruition with respect to the fund, but we are seeking to get there,” he said.



Peck called WTSY the first digital-registered fund with multichain interoperability. He added that bridging the gap between traditional finance and blockchain is a critical step in improving the investor experience over time.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Many of the world’s biggest financial institutions agree that there is a growing movement to make tokenized assets and digital funds a part of day-to-day ‘traditional’ financial services,” Peck told Blockworks.</blockquote>



“We’re truly an early mover here in the registered fund space, and we think our multichain functionality enables a lot of these use cases,” he said.



Nicole Olson, a vice president of digital product development and innovation at State Street Digital, <a href="https://cms.blockworks.co/state-street-sees-significant-opportunity-in-tokenization/" target="_blank" rel="noreferrer noopener">told Blockworks last month</a> that tokenization is among the company’s biggest focuses.&nbsp;



Sumit Roy, crypto editor and analyst for ETF.com, previously told Blockworks that the WisdomTree fund shares record being available on the blockchain is “a glimpse of the future.” Though it’s conceivable for a fund shares’ official record to live on the blockchain one day — allowing investors to trade their shares peer-to-peer — there are regulatory hurdles to get past first, he added.&nbsp;



The fund is expected to launch through WisdomTree Prime’s digital wallet application, which is currently in beta testing.&nbsp;



The company <a href="https://cms.blockworks.co/wisdomtree-launching-crypto-app/" target="_blank" rel="noreferrer noopener">first revealed plans for</a> the app in January. WisdomTree Prime is designed to allow users to save, spend and invest in cryptoassets such as bitcoin and ether, blockchain-enabled funds and tokenized versions of physical assets.



WisdomTree CEO Jonathan Steinberg has said <a href="https://cms.blockworks.co/wisdomtree-sees-opening-in-crypto-winter/" target="_blank" rel="noreferrer noopener">he expects</a> all financial assets to eventually move onto blockchain infrastructure, and that he intends for the company to be <a href="https://cms.blockworks.co/wisdomtree-ceo-we-will-be-first-to-bring-passive-investing-to-the-blockchain/" target="_blank" rel="noreferrer noopener">a leader in that segment</a>.&nbsp;



Peck declined to comment on specific digital product plans going forward.



“We have said in the past that we want to be a leader in passive investing on blockchain,” he said. “We have strong indexing and research capabilities across asset classes, and we look forward to future product development in this wrapper.”



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Securrency

WisdomTree Set To Launch Digital Fund With Real-world Focus

<div id="highlights-block_630d257c4de77" class="highlights">
 <ul>
 <li>State Street considering acquiring capabilities as part of its tokenization push</li>
 <li>The bank is working with Copper.co to offer cryptoasset custody services by the end of the year</li>
 </ul>
 
</div>



While State Street’s digital arm is working on the ability to custody cryptoassets by the end of the year, tokenization remains a top focus for the business going forward as institutions continue to show interest in the segment.



Using distributed ledger technology to tokenize funds and private assets, for example, to improve efficiency and accessibility is something the company is working on for 2023, according to Nicole Olson, a vice president of digital product development and innovation at the bank.


<div class="wp-block-image">
<figure class="alignright size-medium"><img loading="lazy" decoding="async" width="300" height="300" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg" alt="State Street Nicole Olson" class="wp-image-29598" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/nicole-olson-300x300.jpg?w=500 500w" sizes="auto, (max-width: 300px) 100vw, 300px" /><figcaption>State Street&#8217;s Nicole Olson | Source: State Street</figcaption></figure></div>


“[Tokenization] is exciting for me because there’s a significant opportunity there for State Street to play and for State Street clients,” she said. “It’s broadly adding digital tech to those more traditional assets and bringing them into the future.”&nbsp;



State Street’s assets under custody and administration were $42.6 trillion as of June 30. Its asset management arm had $3.9 trillion in assets at that time.



Olson joined the company’s digital product development and innovation team in 2018. State Street formally revealed <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">the launch of its digital finance division</a>, renamed State Street Digital, in June 2021. <a href="https://www.statestreet.com/executive-leader/chakar-nadine.html" target="_blank" rel="noreferrer noopener">Nadine Chakar</a> leads the unit.



“That coincided with a doubling down or even tripling down of focus on digital at the bank,” Olson said. “We transitioned from being more experimental when I first joined, really encapsulated in innovation, to now it’s very much the future of the bank.”



<h3 class="wp-block-heading">Product roadmap</h3>



<a href="https://cms.blockworks.co/state-street-teams-with-lukka-to-expand-crypto-services/" target="_blank" rel="noreferrer noopener">State Street partnered</a> with cryptoasset data and software provider <a href="https://www.lukka.tech/">Lukka</a> in July 2021 to help it provide digital and cryptocurrency asset fund administration capabilities for its private funds clients.&nbsp;



More recently, State Street Digital revealed in March that it entered into a licensing agreement with <a href="http://copper.co/">Copper.co</a> to launch a digital custody offering for institutions. Copper.co provides custody, trading and settlement solutions across 450 cryptoassets and more than 40 exchanges.&nbsp;



Olson said State Street Digital intends to offer the ability to custody some of the “blue-chip” cryptoassets, such as bitcoin and ether, by the end of the year before introducing others.&nbsp;



But tokenization is perhaps Olson’s biggest focus as the company seeks to add blockchain-based rails to funds and private assets.&nbsp;



Tokenization can allow shares of a fund to be freely traded on a digital ledger, making the process more efficient for both the fund issuer and end investors, the executive said.&nbsp;



Tokenizing private assets can solve problems around accessibility in the secondary market and liquidity in those assets, Olson added.&nbsp;



Finally, State Street is working on adding smart contracts and distributed ledger tech to automate the process of trade collateralization, which she said can help increase the frequency in which the trades are valued and decrease risk.



The recent crypto downturn has shown “elasticity in demand” among a growing number of institutions that realize blockchain technology is here to stay.&nbsp;&nbsp;&nbsp;



“Even if bitcoin and ethereum are fluctuating, firms have already made these large decisions to invest and to incorporate this technology,” Olson said.



<h3 class="wp-block-heading">M&amp;A</h3>



Olson said a key to success in the crypto space for financial services incumbents is to partner with specialized companies in the sector. BlackRock, the world’s largest asset manager, <a href="https://cms.blockworks.co/industry-watchers-execs-weigh-significance-of-blackrock-coinbase-deal/" target="_blank" rel="noreferrer noopener">teamed up with Coinbase</a> earlier this month to allow institutional clients of its Aladdin platform to get bitcoin exposure.



“State Street has the breadth of client relationships, the reputation, the global presence,” she said. “And then you get a newer entrant that can move quickly that has a very specific technology or skill set that they’ve honed through the entire existence of their organization.”



The custody bank <a href="https://cms.blockworks.co/state-street-u-s-bank-in-on-30m-securrency-raise/" target="_blank" rel="noreferrer noopener">participated in the $30 million Series B round</a> for blockchain-based financial and regulatory technology firm <a href="https://www.securrency.com/" target="_blank" rel="noreferrer noopener">Securrency</a> in April 2021. Another investor in the round was WisdomTree Investments, <a href="https://cms.blockworks.co/wisdomtree-ceo-we-will-be-first-to-bring-passive-investing-to-the-blockchain/" target="_blank" rel="noreferrer noopener">whose CEO has said</a> that virtually all financial assets will eventually come to the blockchain through tokenization.



In addition to State Street’s ongoing collaborations with Lukka and Copper.co, Olson said tokenization would be an area in which the bank would potentially seek to add capabilities.&nbsp;&nbsp;&nbsp;



“There’s the age old question of build versus buy, and do we partner, do we invest or do we acquire?” she added. “All of those are on the table.”



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State Street Sees ‘Significant Opportunity’ in Tokenization

<div id="highlights-block_61b24589b50c4" class="highlights">
 <ul>
 <li>The US Securities and Exchange Commission (SEC) denied WisdomTree’s spot bitcoin ETF in a Dec. 1 letter</li>
 <li>The ETF’s proposed custodian, US Bank, rolled out its crypto custody services for fund managers in October</li>
 </ul>
 
</div>



WisdomTree amended its application for an ETF that would invest directly in bitcoin after the US Securities and Exchange Commission (SEC) rejected its proposal for such a product last week.



“The trust is not registered under the Investment Company Act of 1940, as amended,” according to <a href="https://www.sec.gov/Archives/edgar/data/1850391/000119312521350924/d122075ds1a.htm" target="_blank" rel="noreferrer noopener">a Dec. 8 filing</a>. “However, the sponsor is applying certain of the substantive requirements of the 1940 Act to the operations, infrastructure and oversight of the Trust [in] order to provide investors with some of the significant protections of the 1940 Act.”



As part of the changes, the WisdomTree Bitcoin Trust would use US Bank as a qualified custodian, the SEC disclosure indicates.



<a href="https://cms.blockworks.co/banking-giant-launches-custody-services-for-bitcoin/" target="_blank" rel="noreferrer noopener">US Bank rolled out</a> its crypto custody services for fund managers in October. A company announcement noted at the time that the custody services are intended for institutional investment managers with private funds in the US or Cayman Islands who would like to secure their bitcoin.



Bitcoin-focused financial services company NYDIG was also named the first crypto sub-custodian announced in US Bank’s network of providers.



US Bank had announced in April that it would administer NYDIG’s planned bitcoin ETF this year, pending regulatory approvals. That same month, US Bank participated in <a href="https://cms.blockworks.co/state-street-u-s-bank-in-on-30m-securrency-raise/" target="_blank" rel="noreferrer noopener">a funding round</a> for blockchain-based financial and regulatory technology firm Securrency.



US Bank Wealth Management and Investment Services had about $8.6 trillion in assets under custody and administration and $282 billion in assets under management, as of June 30.



A spokesperson for the company did not immediately return Blockworks’ request for comment.



Though not technically a bank, Fidelity also offers custody services for bitcoin ETFs, noted Sumit Roy, crypto editor and analyst at <a href="https://www.etf.com" target="_blank" rel="noreferrer noopener">ETF.com</a>.&nbsp;



“That said, it is much more common to see a firm like Coinbase act as a custodian, and that&#8217;s for good reason,” he told Blockworks. “They have been providing crypto custody services for a long time, and they have a great reputation.”



Also, under the 1940 Act, the WisdomTree Bitcoin Trust will provide daily disclosures required for ETFs, such as its portfolio holdings, net asset value per share, market price and any premium or discount as well as its media bid-ask spread, according to the amended filing. The trust’s financial statements will be audited at least annually by an independent registered public accounting firm and WisdomTree will comply with financial record keeping and reporting requirements under the Sarbanes-Oxley Act of 2002.



A WisdomTree spokesperson for the fund group declined to comment beyond the filing.



<h3 class="wp-block-heading">Still no spot bitcoin ETF in US</h3>



SEC Chairman Gary Gensler said during a virtual forum in August that the agency would prefer ETFs filed under the Investment Company Act of 1940 that were limited to bitcoin futures contracts. ProShares launched the US’s first futures-based ETF in October and a couple of issuers have brought to market similar offerings.&nbsp;&nbsp;



The amended application comes after the SEC wrote <a href="https://www.sec.gov/rules/sro/cboebzx/2021/34-93700.pdf">a le</a><a href="https://www.sec.gov/rules/sro/cboebzx/2021/34-93700.pdf" target="_blank" rel="noreferrer noopener">t</a><a href="https://www.sec.gov/rules/sro/cboebzx/2021/34-93700.pdf">ter on Dec. 1</a> denying WisdomTree’s proposed spot bitcoin ETF intended for the US market.&nbsp;



Similar to the SEC’s <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">rejection of VanEck’s planned bitcoin ETF</a>, the SEC notes that the Cboe BZX Exchange, on which the ETF’s shares would trade, did not meet certain requirements of the Securities Exchange Act of 1934. A section of the law requires a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and to protect investors.



The rejection of VanEck’s proposed product led to many <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">industry professionals saying</a> they do not expect the SEC to allow a spot bitcoin ETF to hit the US market until the second half of 2022, at the earliest.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I don&#8217;t think this is going to necessarily move the needle in terms of the SEC approving a spot bitcoin ETF,” Roy said of WisdomTree’s amendments.</blockquote>



WisdomTree manages roughly $75 billion assets, globally. The firm has spot bitcoin and Ethereum ETFs trading in Europe <a href="https://cms.blockworks.co/wisdomtree-launches-spot-etps-in-europe/" target="_blank" rel="noreferrer noopener">and added</a> several physically backed cryptocurrency basket exchange-traded products in the region last month.



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<hr class="wp-block-separator">

Bitcoin

WisdomTree Amends Bitcoin ETF Application

<div id="highlights-block_6197e881c4607" class="highlights">
 <ul>
 <li>WisdomTree expanded its digital assets team to include a global head of financial crimes focused on anti-money laundering and regulatory compliance</li>
 <li>ETF product development among the ways the asset manager is positioning itself for “a reorientation of financial services around DeFi concepts,” its head of digital assets says</li>
 </ul>
 
</div>



WisdomTree is looking to bring more crypto products to investors in 2022 while also focusing on how blockchain can change the financial world more broadly.&nbsp;



“We think it’s going to be both a proof of concept but also a real demonstration of the types of value DeFi and [distributed ledger technology]-related can bring to what you might call more traditional financial services,” Will Peck, WisdomTree’s head of digital assets told Blockworks in an interview.



As part of these efforts, the fund group, which had about $76 billion in assets under management as of last month, <a href="https://www.sec.gov/Archives/edgar/data/1859001/000119312521136968/d156395dn1a.htm" target="_blank" rel="noreferrer noopener">filed in April</a> to launch a Digital Short-Term Treasury Fund.&nbsp;



Though the fund’s transfer agent, Securrency Transfers, will maintain the official record of share ownership in book-entry form, it will also be recorded, or digitized, on the blockchain.



WisdomTree had led a nearly $18 million Series A funding round for Securrency, a developer of institutional-grade blockchain-based financial and regulatory technology, in January 2020.



“Through the app made available by WisdomTree and by leveraging Securrency’s blockchain infrastructure technology, it is anticipated that fund shareholders will have the benefit of shares that will be able to operate on more than one blockchain, including the Stellar and Ethereum blockchains, via a bridge to facilitate interoperability between blockchains,” <a href="https://www.sec.gov/Archives/edgar/data/1859001/000119312521136968/d156395dn1a.htm" target="_blank" rel="noreferrer noopener">the document</a> notes.



The fact that the record will be made available on various blockchains, with the ability to transfer the record from one blockchain to another, is “a glimpse of the future,” according to Sumit Roy, crypto editor and analyst at ETF.com.



“In the future, it&#8217;s conceivable that the official record could live on the blockchain and investors will be able to trade their shares peer-to-peer through the blockchain,” Roy told Blockworks. “There are a lot of regulatory hurdles before we get there, but this is a step in that direction.”



<h3 class="wp-block-heading">Expanding its digital assets team</h3>



The firm most recently expanded its digital assets team, which now includes 12 members across the United States, United Kingdom and Ireland. The unit, which notably added a four-person research team, is dedicated to technology, compliance, legal, product, marketing, research and education related to digital assets, blockchain and decentralized finance (DeFi).



Among the new hires was John Davidson, who joined WisdomTree as global head of financial crimes. In the new role, he is focused on anti-money laundering, or AML, and regulatory compliance.



Davidson had held a similar position at E-Trade and was a managing director at Morgan Stanley. Prior to that, he spent 19 years as an enforcement attorney and AML policy specialist at the Office of Thrift Supervision, the Federal Reserve’s Board of Governors and the US Securities and Exchange Commission (SEC).



“We are embracing responsible DeFi that upholds the foundational principles of regulation in this innovative and quickly evolving space,” WisdomTree CEO Jonathan Steinberg said in a statement. “We’re a company rooted in innovation and transparency, and we see responsible DeFi as the next chapter for us and the broader financial services industry as a whole.”



WisdomTree expects more technology-focused hires in 2022, a spokesperson noted, as it looks to add to its existing application development team, which develops all client-facing analytics tools.



<h3 class="wp-block-heading">Other US ETFs</h3>



The WisdomTree Enhanced Commodity Strategy Fund (GCC) — an actively managed ETF seeking to provide broad exposure to a diversified basket of commodities — last month became the first ETF to add bitcoin futures.&nbsp;



The addition came just before the launch of bitcoin futures ETFs by ProShares and then Valkyrie Investments.&nbsp;



WisdomTree also filed with the SEC last month to add bitcoin futures to its Managed Futures Strategy Fund (WTMF). The ETF, which invests in the futures contracts of 21 commodities — such as crude oil, natural gas, gold, silver and corn — was also seeking to invest up to 5% of its net assets in bitcoin futures contracts.



The firm has proposed a bitcoin ETF that would invest in the crypto asset directly, though it, along with similar offerings from a range of issuers, awaits SEC approval. Steinberg <a href="https://cms.blockworks.co/wisdomtree-ceo-blockchain-could-disrupt-financial-industry-like-etfs-did/" target="_blank" rel="noreferrer noopener">said during an interview</a> at Blockworks’ Digital Asset Summit in September that the SEC’s hesitancy to allow a bitcoin ETF is forcing investors into inferior structures.



“We think there’s some questions and issues with a futures-based bitcoin product; obviously the contango and the position limits kind of leads to an experience where you can get significant tracking error from spot,” Peck said. “So we haven’t been focused on futures in the past, and we think the ultimate best execution is in a spot ETF.”



<h3 class="wp-block-heading">Looking ahead&nbsp;</h3>



The firm is generating $4 million of run rate revenue from its crypto exchange-traded products in Europe, Steinberg said during the firm’s third quarter earnings call last month. It launched a physically backed bitcoin ETP in 2019 and brought an Ethereum product to the European market earlier this year.&nbsp;&nbsp;



Additional strategies, such as “crypto basket” exchange-traded products, are in the product development pipeline, WisdomTree President and COO Jarrett Lilien said during the earnings call.



In the US, Steinberg said he sees a big opportunity for advisors to give their clients crypto exposure through models and separately managed accounts. He noted that the latter vehicle may be financial intermediaries’ preference amid regulatory uncertainty around crypto ETFs.



WisdomTree also partnered with Onramp, a workflow company for registered investment advisors, and crypto exchange and custodian Gemini.&nbsp;



The shared initiative, to bring crypto to advisors, got its first model win during the third quarter, executives revealed. Federal Life announced the launch of a variable annuity product that implements a WisdomTree model, comprising nearly two-thirds direct crypto and one-third disruptive technology ETFs. 



“Long-term, we think there’s going to be a reorientation of financial services around DeFi concepts,” Peck told Blockworks. “Maybe that involves more regulation or regulatory approvals or kind of some changes to how it is today, but we think it’s coming, and we want to position ourselves for that future.”



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<hr class="wp-block-separator">

DeFi

WisdomTree Plans to Launch More Crypto Offerings in 2022

Tanaya Macheel

<div id="highlights-block_60887c2371792" class="highlights">
 <ul>
 <li>U.S. Bank also said it will also administer NYDIG’s bitcoin exchange-traded fund this year, pending regulatory approvals</li>
 <li>U.S. Bank has been developing its “blockchain initiatives” since 2015</li>
 </ul>
 
</div>



U.S. Bank is rolling out a custody service for digital assets and will administer NYDIG’s bitcoin exchange traded fund this year pending regulatory approvals.&nbsp;



The fifth-largest <a href="https://www.usbank.com/about-us-bank.html" target="_blank" rel="noreferrer noopener">bank</a> in the US by assets is moving forward with its plans in an effort to meet increasing demand by pension funds, insurance companies and other institutional clients to invest in digital assets, Christine Waldron, U.S. Bank’s strategy chief, told Blockworks Tuesday.



It follows the <a href="https://cms.blockworks.co/bny-mellon-offer-bitcoin-custody-this-year/" target="_blank" rel="noreferrer noopener">Bank of New York Mellon</a> and <a href="https://cms.blockworks.co/state-street-lends-tech-to-institutional-crypto-trading-platform/" target="_blank" rel="noreferrer noopener">State Street</a>, both of which have made similar announcements in recent weeks.



&#8220;That&#8217;s the best part of this story: that you&#8217;re really seeing the institutions saying, ‘this is an asset class that is here to stay, and we need to now make sure we&#8217;re putting that appropriate rigor around it,’” Waldron said.



<h3 class="wp-block-heading">U.S. Bank saw the trend coming</h3>



U.S. Bank has been developing its “blockchain initiatives” since 2015, Waldron said. They include an RFP to expand its custody network to include cryptocurrency custodians, its ability to service digital asset funds like NYDIG (a longstanding client of the bank’s), and its <a href="https://cms.blockworks.co/state-street-u-s-bank-in-on-30m-securrency-raise/" target="_blank" rel="noreferrer noopener">investment in Securrency</a>, a financial technology firm focused on bringing crypto compliance tools to banks and financial institutions.



“We had the benefit of putting a lot of infrastructure in place early on to help our clients,” Waldron said. “We saw this trend coming, and we were in a really good position to help them meet the market needs and demand.&#8221;



Waldron said the bank has selected its sub-custodian for storing digital assets but has yet to reveal that partner as it finalizes risk management, compliance and operational integration processes.



U.S. Bank also said it will also administer NYDIG’s bitcoin exchange-traded fund this year, pending regulatory approvals. NYDIG, the digital asset subsidiary of Stone Ridge Asset Management, filed for a bitcoin ETF in February, joining Galaxy Digital, Fidelity, Van Eck, Grayscale and others <a href="https://cms.blockworks.co/fidelity-enters-the-bitcoin-etf-race/" target="_blank" rel="noreferrer noopener">vying for SEC approval for a bitcoin ETF</a>.



<h3 class="wp-block-heading">Have to hold</h3>



Waldron said that’s just the first U.S. Bank has been named in, but that it’s been working closely with “a few” other clients to file their S-1s (the Securities and Exchange Commission filing companies submit when planning to go public, to register their securities) establishing cryptocurrency ETFs.&nbsp;



“This product is going to come to market at some point here,” she said.



Despite U.S. Bank’s work dating back several years, Waldron said the landscape began to shift in October, when the US Office of the Comptroller of the Currency confirmed banks can hold stablecoin reserves as a service to bank customers.&nbsp;



“You saw huge institutional investor money flow starting to come in and then you really heard the rhetoric with all of these third-party investment managers saying ‘cryptocurrency is going to be one of these things we&#8217;re going to maybe want to add into our portfolio. It may not be our primary investment objective, it may not even be something we want to hold long-term, but it&#8217;s something we&#8217;re going to end up having to hold,’” Waldron said.

crypto custody

U.S. Bank to Launch Crypto Custody

Casey Wagner

<div id="highlights-block_6086cfd591875" class="highlights">
 <ul>
 <li>Securrency has raised $30 million in a Series B round from State Street, U.S. Bank, WisdomTree Investments, Abu Dhabi Catalyst Partners Limited (ADCP) and others</li>
 <li>With the Series B, Securrency now has $64.5 million in total funding</li>
 </ul>
 
</div>



Securrency, a blockchain-based financial and regulatory technology firm, has raised $30 million in a Series B round from State Street, U.S. Bank, WisdomTree Investments, Abu Dhabi Catalyst Partners Limited (ADCP) and others.&nbsp;



Monday’s announcement follows Securrency’s $17.75 million Series A raise in early 2020, which was led by WisdomTree.&nbsp;



“We believe the Securrency team is uniquely suited to lead in blockchain-based fintech and regtech going forward,” said Jonathan Steinberg, <a href="https://cms.blockworks.co/cboe-may-re-list-bitcoin-futures-report/" target="_blank" rel="noreferrer noopener">WisdomTree</a> Founder and CEO in a statement. “Our ongoing financial commitment reaffirms the strength of our support.”



Securrency focuses on bringing crypto compliance tools to banks and financial institutions. The Washington, D.C-based firm plans to expand into decentralized finance and other areas with the new capital.&nbsp;



“Blockchain technology will be a vital part of the interconnected and interoperable future of global finance, but a truly viable system must connect the full panoply of financial services and systems to digital assets infrastructure,” said Dan Doney, Securrency co-founder and CEO in a statement.



The company also applied for licenses to expand offerings to international finance center Abu Dhabi Global Market (ADGM).&nbsp;With the Series B, Securrency now has $64.5 million in total funding, according to <a href="https://www.crunchbase.com/organization/securrency" target="_blank" rel="noreferrer noopener">data</a> from Crunchbase.