Ben Strack

The blockchain space is abuzz this week as nearly a dozen issuers gear up to introduce their various spot bitcoin ETFs. However, some of the largest fund groups are notably absent from the fracas, having chosen to remain on the sidelines.



Leading the charge among traditional finance giants is BlackRock, the world’s largest asset manager. BlackRock holds a staggering amount of nearly $2.6 trillion in assets under management in its US ETFs, as reported by VettaFi data. Its proposed entry into the bitcoin ETF space is a monumental move, signaling the blending of decentralized assets with conventional investment strategies.



Invesco, another heavyweight, currently ranking fourth in ETF assets with $450 billion, has also joined the fray. <a href="https://blockworks.co/news/invesco-and-galaxy-team-to-build-suite-of-crypto-etfs">The firm partnered with crypto-focused Galaxy Digital</a> in 2021 and filed its latest spot bitcoin ETF proposal in 2023.



But not all big ETF players have chosen to pursue such a fund.



Vanguard, State Street and Charles Schwab — respectively managing $2.3 trillion, $1.1 trillion, and $315 billion, and ranked among the top five issuers by ETF assets globally — seem to have chosen not to get involved.



“Vanguard has no intent to offer a spot bitcoin ETF or any other crypto-related products,” a spokesperson told Blockworks Tuesday.



“Vanguard believes that the investment case for cryptocurrencies is weak,” the representative added. “Unlike stocks and bonds, most crypto assets lack intrinsic economic value and generate no cash flows. And cryptocurrencies&#8217; high volatility runs counter to our goal of helping investors generate positive real returns over the long term.”



State Street Global Advisors — ranking third in US ETF assets under management — launched the industry’s first ETF, the SPDR S&amp;P 500 ETF (SPY), in 1993. It offers the largest physically-backed ETF focused on gold, an asset bitcoin is sometimes compared to.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Vanguard is Vanguard, so would never expect them to get involved w/ spot bitcoin ETF (they still don’t even have physical gold ETF)… But think State Street might regret sitting this one out… State Street birthed ETFs in US. They have largest gold ETF. Why sit this race out?&mdash; Nate Geraci (@NateGeraci) <a href="https://twitter.com/NateGeraci/status/1742734451212185941?ref_src=twsrc%5Etfw">January 4, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But despite being known as an ETF pioneer, State Street opted not to be one of a dozen or so firms to enter the spot bitcoin ETF race.



“We continuously evaluate our lineup of ETFs, and at this time we do not offer a crypto ETF,” a spokesperson said Tuesday, declining to comment further.



Read more: <a href="https://blockworks.co/news/state-street-sees-significant-opportunity-in-tokenization">State Street Sees ‘Significant Opportunity’ in Tokenization</a>



Sumit Roy, a senior analyst for ETF.com, noted State Street’s standing as the world’s largest custodian and its build-out of digital asset-focused custody solutions.&nbsp;



The firm had roughly $40 trillion in assets under custody and administration, as of Sept. 30. State Street <a href="https://blockworks.co/state-street-launches-digital-finance-unit-for-crypto/">launched its digital finance division</a> in June 2021 and entered into a licensing <a href="https://investors.statestreet.com/investor-news-events/press-releases/news-details/2022/State-Street-to-Develop-Digital-Custody-in-Collaboration-with-Copper.co-03-09-2022/default.aspx#:~:text=State%20Street%20Digital%20will%20leverage,environment%20operated%20by%20State%20Street.">agreement</a> with Copper.co in March 2022 to develop a digital custody offering for institutions.&nbsp;



“It’s possible that the firm is focusing its energy on that part of the ecosystem rather than getting involved in the crowded spot bitcoin ETF race,” Roy told Blockworks. “It&#8217;s hard to imagine that they will launch a spot bitcoin ETF in the future if they haven&#8217;t thrown their hat in the ring already.”



As for Charles Schwab, its asset management division too has not filed for a spot bitcoin ETF.&nbsp;



David Botset, head of equity product management and innovation at Schwab Asset Management, <a href="https://blockworks.co/news/blockchain-etfs-gaining-steam">told Blockworks</a> in January 2022 the company was evaluating “opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF.” The firm <a href="https://blockworks.co/news/first-charles-schwab-crypto-etf-set-to-launch-next-week">launched an ETF that holds crypto-related stocks</a> later that year.&nbsp; &nbsp;



A Schwab spokesperson on Tuesday declined to comment on future crypto ETF plans.



“I don&#8217;t think anyone else will try to launch a vanilla spot bitcoin ETF in the future, but I do expect that there will be more creative funds that add other types of exposures on top of just bitcoin,” Roy said. “A covered call bitcoin ETF, for instance, is one we are likely to see in the future.”



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Big ETF players remain on the sidelines amid possible milestone bitcoin fund approval

James Cirrone

Major companies in the crypto space added key staff this week, with one of them making a C-suite level addition.



Digital Currency Group (DCG) hired Mark Shifke as chief financial officer to replace <a href="https://blockworks.co/news/dcg-turnover-taking-center-stage">Michael Kraines, who stepped down in April</a>. 



DCG had a tough start to the year, especially with its subsidiary <a href="https://blockworks.co/news/genesis-in-chapter-11-wont-insulate-silbert-winklevoss-says">Genesis going bankrupt in January</a>. The firm is still wrapped up <a href="https://blockworks.co/news/gemini-suit-accuses-dcg-silbert-of-aiding-and-abetting-fraud">in litigation with Gemini and Genesis</a> over $1.1 billion it allegedly owes.



Shifke was dubbed an “<a href="https://www.reuters.com/business/finance/crypto-firm-dcg-appoints-ma-specialist-mark-shifke-cfo-2023-07-31/">M&amp;A specialist</a>” by Reuters for spending around nine years working on mergers and acquisitions at JPMorgan and Goldman Sachs. Shifke even has experience as a CFO, serving in that position at both Billtrust and Green Dot Corporation.&nbsp;



With the next hire, Genesis again has a connection.



BitGo, a digital asset custody provider, is bringing on former Genesis executive <a href="https://www.linkedin.com/in/matthew-ballensweig-42790441/">Matthew Ballensweig</a> to serve as managing director of the newly launched Go Network. 



The Go Network is BitGo’s platform to grant institutions access to “liquidity and securely settle trading transactions across a multitude of venues through one platform,” according to a press release shared with Blockworks.&nbsp;



Ballensweig will “spearhead” the development of that product, leveraging his years of experience shaping Genesis’s digital asset prime-services business.&nbsp;



Ballensweig spent nearly five and a half years at <a href="https://blockworks.co/tag/genesis">Genesis</a>. His last position was as co-head of trading and lending. He left that post in September 2022, thereby avoiding being around when the firm succumbed to its financial troubles.&nbsp;



Ballensweig was also a senior analyst at hedge fund Bridgewater Associates for over three years.&nbsp;



<a href="https://blockworks.co/tag/bitgo">BitGo</a> CEO Mike Belshe said he feels confident with Ballensweig at the helm of Go Network given his wealth of experience with institutional digital asset trading.&nbsp;



“Matt’s depth of understanding and his client relationships, combined with his vision to enhance liquidity and settlement products, will significantly contribute to the commercialization of Go Network,” Belshe said.&nbsp;



<h2 class="wp-block-heading">Layoffs and departures abound</h2>



Investment and asset management giant <a href="https://blockworks.co/tag/state-street">State Street</a> is losing its head of custody for digital assets.&nbsp;



<a href="https://www.linkedin.com/in/swen-werner/">Swen Werner</a> is leaving the company after eight years. He served in a variety of crypto and blockchain-related roles and has been based in London. Earlier in his career, Werner held director-level positions at JPMorgan and Deutsche Bank. 



In a LinkedIn <a href="https://www.linkedin.com/feed/update/urn:li:activity:7092200645616623617/">post</a>, Werner cited “personal matters” as the reason why he can’t immerse himself in the industry to the extent he wants to at this time.&nbsp;



State Street <a href="https://news.bloomberglaw.com/business-and-practice/state-streets-head-of-custody-for-digital-assets-to-depart">told</a> Bloomberg Law that Werner’s replacement would be announced “in due course.”



Read more: <a href="https://blockworks.co/news/state-street-sees-significant-opportunity-in-tokenization">State Street sees ‘significant opportunity’ in tokenization</a>



Shifting over to the Web3 media landscape, NFT Now has cut staff due to changing market conditions.&nbsp;



The announcement came on Monday via NFT Now President Alejandro Navia, who claimed the tokenized media company saw “rapid growth” during the bull run.&nbsp;



“Given the current climate, it is clear that this pace of growth was unsustainable and we over-hired. As president, I take full ownership of this mistake,” Navia wrote on <a href="https://twitter.com/AlejNavia/status/1686024751377006594?s=20">Twitter</a>.



Navia didn’t specify how many employees were let go, and NFT Now didn’t respond to a request for comment.&nbsp;



<h2 class="wp-block-heading">Other notable hires</h2>



<ul>
<li>Crypto investment firm <a href="https://blockworks.co/tag/coinfund">Coinfund</a> has shaken up the structure of its in-house legal team, hiring Dilveer Vahali for the newly created position of head of venture legal, Blockworks <a href="https://blockworks.co/news/coinfund-head-venture-legal">reported</a> Wednesday.</li>



<li>Sarah Breeden, who worked on the Bank of England’s CBDC task force, will <a href="https://www.bankofengland.co.uk/news/2023/august/sarah-breeden-appointed-deputy-governor-for-financial-stability">assume the role</a> of deputy governor at the central bank on Nov. 1, 2023.</li>



<li>Bitcoin Magazine <a href="https://bitcoinmagazine.com/business/bitcoin-magazine-names-mark-goodwin-editor-in-chief">tapped</a> Mark Goodwin to serve as editor in chief.</li>
</ul>



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Crypto hiring: DCG hires new CFO, BitGo taps former Genesis exec

Three-quarters of professional investors still aren’t invested in crypto, but about half said they are interested in allocating to ETPs focused on the space.



An ETP, or exchange-traded product, is a fund structure that allows investors to gain exposure to one asset, or a basket of different investable assets — in this case, cryptocurrencies. Gaining exposure to crypto via the fund wrapper is overall more appealing than dealing with digital wallets, according to survey respondents.



The study by Trackinsight — with help from fund giants JPMorgan Asset Management and State Street — surveyed 549 professional investors and fund selectors that allocate roughly $900 billion across ETF strategies.&nbsp;



Though 75% said they don’t have exposure to the sector, 48% said they would consider investing in single-token ETPs. Roughly the same amount — 47% — would potentially be interested in investing in ETPs offering exposure to more than one crypto asset, the survey found.&nbsp;&nbsp;



Investing directly in cryptocurrencies is less attractive, according to the findings, as 37% reported interest there. Roughly 23% of professional investors said they would not consider investing in crypto.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1968" height="834" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=1024&amp;h=1024" alt="" class="wp-image-55655" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=1968 1968w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/ETF-Survey-Chart.jpg?w=80 80w" sizes="(max-width: 1968px) 100vw, 1968px" /></figure>



Frank Koudelka, global ETF product specialist at State Street, said in a statement that the survey touches on what he called “megatrends” the company is “observing from our perch” as the largest global servicer of exchange traded funds.



The percentage of respondents considering exposure to crypto ETFs is not surprising, he told Blockworks in an email.



“We continue to hear anecdotal evidence that many professional investors consider small allocations to cryptocurrency as an non-correlated asset class that makes sense in a portfolio,” Koudelka added. “Considering the recent run-up in bitcoin prices, there seems to be a growing interest to invest in cryptocurrency via the ETF structure.”



Though bitcoin is up about 64% year to date, its price has dropped roughly 10% in the past month.&nbsp;



Bryon Lake, head of ETF solutions at JPMorgan Asset Management, said the ETF vehicle is a great way to access thematic investment strategies and to diversify holdings. Investor feedback and demand is a main driver of the firm’s product development discussions, he added.



“But since our active engines are currently not focused on crypto, I’d say [offering crypto ETFs] is not something I see happening in the near future,” Lake told Blockworks.



The surveyed allocators are still most focused on the two biggest assets. When asked which ones they are invested in or could look to allocate to in the future, 59% said bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and 49% said ether (<a href="https://blockworks.co/price/eth">ETH</a>).&nbsp;



Though the SEC has not yet approved an ETF that would invest in bitcoin directly, the securities regulator <a href="https://blockworks.co/news/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading">allowed bitcoin futures ETFs</a> to hit the market in October 2021.



Fund groups continue seeking new types of crypto products, such as Grayscale Investments, which filed last week for <a href="https://blockworks.co/news/grayscale-angling-for-crypto-etfs">three new ETFs</a>.&nbsp;



Its planned Grayscale Global Bitcoin Composite ETF would invest in ETPs “listed on major non-US exchanges” that hold or are backed by physical bitcoin — and bitcoin mining companies too.



NEOS, a firm focused on options-based income ETFs, <a href="https://www.sec.gov/Archives/edgar/data/1848758/000138713123006484/neos-485apos_051223.htm">filed</a> on Friday to launch a Bitcoin High Income ETF — an actively managed fund that would employ a bitcoin futures call options strategy.



Grayscale, <a href="https://blockworks.co/news/issuers-piggyback-on-grayscale-proposal">along with other asset managers</a> like Bitwise Asset Management, Direxion and Roundhill Investments, are also seeking to launch products that would give investors exposure to ether futures contracts.



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Most Pro Investors Not Invested in Crypto, but About Half Consider Entrance Via ETPs

Silvergate’s stock inched higher early Friday as two of the world’s largest financial institutions have revealed growing stakes in the crypto bank in recent days.



State Street owned 9.32% of Silvergate stock as of Dec. 31, according to a Thursday <a href="https://www.sec.gov/Archives/edgar/data/93751/000009375123000093/Silvergate_Capital_Corp.txt" target="_blank" rel="noreferrer noopener">filing</a>.&nbsp;&nbsp;



The filing came a few days after a separate disclosure showed that BlackRock, the world’s largest asset manager, upped <a href="https://www.sec.gov/Archives/edgar/data/1312109/000130655023005093/us82837p4081_013123.txt" target="_blank" rel="noreferrer noopener">its Silvergate stake</a> to 7.2%.&nbsp;



Most of BlackRock’s position in the crypto bank is spread across a number of the fund manager’s ETFs, reflecting investor demand for exposure to indexes that comprise Silvergate.



BlackRock has roughly $10 trillion assets under management, while State Street manages about $3.5 trillion. The latter company also had nearly $37 trillion in assets under custody and administration at the end of 2022.  



Spokespeople for BlackRock and State Street declined to comment.



Silvergate stock was up nearly 2% on the day at 10:30 am ET Friday. Though down about 80% from a year ago, the stock is up about 20% so far in 2023.



Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-02-02/silvergate-faces-doj-fraud-probe-over-ftx-and-alameda-dealings" target="_blank" rel="noreferrer noopener">reported</a> Thursday that prosecutors in the US Justice Department’s fraud unit are investigating Sivergate’s dealings with bankrupt crypto exchange FTX and affiliate Alameda Research.&nbsp;



Silvergate CEO Alan Lane <a href="https://blockworks.co/news/silvergate-has-ample-liquidity">previously described</a> the bank’s due diligence process on FTX and Alameda in a December letter.



“When Silvergate received payments directed to Alameda Research and credited it to the account of the same name, this was consistent with the instructions from the sender of the wire and industry practice,” Lane said at the time.&nbsp;



A Silvergate representative declined to comment further.



The Bloomberg report came a few days after US Sens. Elizabeth Warren (D-Mass.), Roger Marshall (R-Kan.) and John Kennedy (R-La.) <a href="https://www.reuters.com/technology/silvergate-pressed-by-senators-after-evasive-responses-ftx-bloomberg-law-2023-01-31/" target="_blank" rel="noreferrer noopener">reportedly</a> sent a letter to Silvergate asking for details about its risk management practices and ties to FTX — following up on <a href="https://blockworks.co/news/crypto-bank-silvergate-asked-to-detail-records-of-purported-ftx-ties">a December inquiry</a>.



Silvergate disclosed last month <a href="https://blockworks.co/news/silvergate-stock-plummets-45-on-major-staff-cuts-massive-withdrawals">it was forced to sell assets</a> at a major loss during the fourth quarter to fulfill roughly $8 billion of customer withdrawals.



The crypto bank held $4.3 billion of short-term Federal Home Loan Bank advances, as of Dec. 31, according to a Jan. 5 company <a href="https://ir.silvergate.com/news/news-details/2023/Silvergate-Announces-Select-Preliminary-Fourth-Quarter-2022-Financial-Metrics-and-Provides-Business-Update/default.aspx" target="_blank" rel="noreferrer noopener">filing</a>. This funding <a href="https://blockworks.co/news/silvergate-home-loan-bank-advances">was used to satisfy outflows</a>, according to the company.



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State Street and BlackRock Boost Silvergate Stake. What Is the Stock Doing?

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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Ex-State Street Digital Head To Lead RegTech Blockchain Startup

<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="(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

Casey Wagner

<div id="highlights-block_62050d46d5186" class="highlights">
 <ul>
 <li>Traditional financial institutions are interested in adopting crypto technology, and infrastructure providers are having a hard time keeping up</li>
 <li>Institutions like Vanguard and State Street are already using smart contracts for settlements</li>
 </ul>
 
</div>



According to enterprise technology infrastructure provider Symbiont, Wall Street is already leaning heavily into crypto technology, and the adoption is just beginning.



Symbiont, founded in 2013, launched its first enterprise blockchain product in 2019 with Vanguard. The product allows for smart contracts to take over data normalization for Vanguard’s passive index funds, allowing for orders to be executed autonomously.



<a href="https://www.symbiont.io/" target="_blank" rel="noreferrer noopener">Symbiont</a> currently manages about $2.3 billion of Vanguard&#8217;s passive indices value through that network, Mark Smith, CEO of Symbiont, said.



“We are looking at the technology as a toolkit to solve existing problems,” said Smith.&nbsp;



“From day one, it was really a question of how do we use this technology, in an appropriate way, for regulated entities to use it in a compliant fashion.”&nbsp;



The <a href="https://cms.blockworks.co/?s=infrastructure" target="_blank" rel="noreferrer noopener">infrastructure</a> provider also partners with other big names on Wall Street, including Citigroup, Nasdaq and Franklin Templeton Investments, and hopes for more collaboration opportunities in the future, Smith said.&nbsp;



In its most recent partnership, Symbiont worked with Vanguard and State Street to bring smart contracts to traditional financial transactions.&nbsp;



<blockquote class="wp-block-quote">“We&#8217;ve been at the tip of the spear from an enterprise blockchain perspective looking at blockchain smart contract technology as tools to solve real world problems in regulated financial markets,” said Smith.</blockquote>



Vanguard and State Street now use Assembly, Symbiont’s distributed ledger technology, in the margin calculation process for a live trade of a 30-day foreign exchange forward contract.



Vanguard, as a global asset manager, has many international funds, meaning Vanguard must have the available foreign currency on a certain date and time to settle those transactions. To hedge against the risk of the timeframe in which Vanguard needs to settle in a foreign currency, the firm creates forward contracts or swap contracts.



With Assembly, Vanguard and State Street, which act as the bank counterparty, can negotiate the transaction in a secure, encrypted manner through the blockchain, Smith said.



“The smart contract calculates exactly how much collateral you need based on an initial margin calculation that&#8217;s agreed upon amongst the two counterparties,” Smith said. “Historically, each side calculates margin on their own, and then they reconcile on an overnight basis or every two days manually to determine if both sides got the right margin variance calculation.”&nbsp;&nbsp;



Symbiont, and other companies in the infrastructure space, are having a hard time keeping up with growing interest in crypto technology from financial institutions, Smith said.



“Demand has actually outpaced expectation, not just from a Symbiont perspective, but I think if you look at the other market participants, they are all looking to expand,” he said. “Now the question becomes how do those entities onboard and become customers, that&#8217;s the next phase of how enterprise blockchain starts to really take hold in these applications.”



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Bringing Blockchain Infrastructure Tech to Wall Street

<div id="highlights-block_61e87c8091e63" class="highlights">
 <ul>
 <li>The acquisition and integration of Omniex will help simplify the experience for institutional investors looking to go deeper into crypto, the company said</li>
 <li>Gemini announced the acquisition of digital asset portfolio management platform BITRIA last week</li>
 </ul>
 
</div>



Less than a week after announcing its acquisition of digital asset portfolio management platform BITRIA, crypto exchange <a href="https://www.gemini.com/" target="_blank" rel="noreferrer noopener">Gemini</a> has bought trading technology platform <a href="https://omniex.io/" target="_blank" rel="noreferrer noopener">Omniex</a>.&nbsp;



Founded in 2017 by former State Street executives, Omniex provides order, execution and portfolio management system solutions for institutional crypto trading.



The acquisition and integration of Omniex into Gemini&#8217;s existing institutional custody, clearing and trading solutions simplifies the experience for institutional investors looking to go deeper into crypto, said Dave Abner, Gemini’s global head of business development.



Specifically, the integration will provide a single point of access to multiple exchanges and OTC liquidity sources, tools and algorithms to ensure trade transparency, and a trading experience with application programming interface (API) connectivity, according to Gemini’s <a href="https://www.gemini.com/blog/gemini-acquires-trading-technology-platform-omniex-launches-gemini-prime" target="_blank" rel="noreferrer noopener">Wednesday announcement.</a>&nbsp;&nbsp;



The buy allows Gemini to publicly launch a crypto prime-brokerage offering, <a href="https://www.gemini.com/prime" target="_blank" rel="noreferrer noopener">Gemini Prime</a>, which select clients have been using over the past year. The product’s full rollout is slated for the second quarter.



The Omniex team will be joining Gemini to expand and drive platform capabilities for the prime services division.



Gemini is seeking to build out its institutional business with crypto solutions that resemble offerings within traditional finance, Abner told Blockworks. 



The company announced <a href="https://cms.blockworks.co/gemini-now-a-one-stop-shop-for-advisors-after-bitria-buy/" target="_blank" rel="noreferrer noopener">its purchase of BITRIA</a> last week. That acquisition allows financial advisors to gain exposure beyond the closed-end funds and spot ETFs focused on the largest tokens, Abner previously noted.



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Gemini Acquires Crypto Trading Tech Platform Omniex

<div id="highlights-block_61030af2b1c50" class="highlights">
 <ul>
 <li>State Street to leverage Lukka’s reference data and prime pricing data tools to serve funds with mature risk processes</li>
 <li>Announcement comes after the financial services giant launched State Street Digital in June to focus on industry shifts</li>
 </ul>
 
</div>



State Street has partnered with crypto asset data and software provider <a href="https://www.lukka.tech" target="_blank" rel="noreferrer noopener">Lukka</a>, which will help the custody bank provide digital and cryptocurrency asset fund administration capabilities for its private funds clients.



The Thursday announcement comes after State Street, which has $42.6 trillion in assets under custody and nearly $4 trillion in assets under management, <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">launched State Street Digital</a>, a new unit focused on addressing the industry’s evolving shift to digital finance. 



“This is just one example in a long history of innovation that State Street has and is continuing to drive within our industry,” State Street CEO Ron O’Hanley said of the division during a July 16 earnings call.&nbsp;



Now, working with Lukka will enable State Street to support its private fund clients with collection, standardization, enrichment, reconciliation, processing and reporting related to crypto and other digital assets, the firm revealed.



Interest in crypto has evolved over the last two years or so from general inquiries to clients actually holding it in their portfolios, said Jennifer Tribush, alternatives lead for State Street Digital. The client segments driving the interest in crypto were traditional asset managers with a private markets hedge fund focus, as well focused alternatives managers, she added.



“It was critically important to make sure that we had a way to support fund administration for those clients holding private funds where they would have crypto that is essentially co-mingled with traditional hedge fund assets,” Tribush told Blockworks.



State Street will utilize Lukka’s middle- and back-office data management solution, as well as <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fdata.lukka.tech%2Freferencedata%2F&amp;esheet=52468284&amp;newsitemid=20210729005601&amp;lan=en-US&amp;anchor=Lukka+Reference+Data&amp;index=4&amp;md5=b608e84d3fd5947f7323262bf06aa894" target="_blank" rel="noreferrer noopener">Lukka Reference Data</a> and <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fdata.lukka.tech%2Fprime%2F&amp;esheet=52468284&amp;newsitemid=20210729005601&amp;lan=en-US&amp;anchor=Lukka+Prime+Pricing+Data&amp;index=5&amp;md5=601e5a442eb96f58609343d85cbac88a" target="_blank" rel="noreferrer noopener">Lukka Prime Pricing Data</a>. 



Lukka Reference Data is a “security master” of crypto asset names, tickers and trading pairs across liquidity providers, service providers and other data sources.



Meanwhile, the Lukka Prime Methodology applies a five-step weighting process for identifying a principal exchange and the last price on that exchange. A score is assigned to select the most appropriate primary exchange and then an executed exchange price is given for each covered crypto asset at a specific time. The offering covers 875 assets and 12 sources of raw pricing data.



The importance of data quality is a common theme as more traditional financial institutions enter the crypto ecosystem, Lukka CEO Robert Materazzi noted.



“Clients of firms like State Street — many of the world’s largest funds — have mature risk processes that require accuracy in reporting that starts with the underlying data,” he told Blockworks in an email. “Crypto asset data is inherently more complex and difficult to manage, so it requires new solutions.”Last December, <a href="https://news.lukka.tech/lukka-closes-series-c-led-by-state-street-with-participation-from-sp-global-and-cpa-com/" target="_blank" rel="noreferrer noopener">State Street led Lukka’s Series C funding</a>, which also included participation from S&amp;P Global and CPA.com.



The raise allowed Lukka to expand its existing institutional-grade software and data products to traditional businesses and funds as they rapidly adopt crypto assets into their businesses and portfolios, the firm said at the time.

State Street Teams with Lukka to Expand Crypto Services

<div id="highlights-block_60f87cfc5beea" class="highlights">
 <ul>
 <li>Pure Digital to offer institutional investors a market for digital assets and cryptocurrencies with physical delivery and bank custody</li>
 <li>Banks working together an indication of “significant joint challenges and market change,” industry executive explains</li>
 </ul>
 
</div>



BNY Mellon is the latest bank set to collaborate with Pure Digital, an interbank marketplace for cryptocurrency price discovery and exchange of wholesale risk, to develop a platform for transacting digital assets.



Jason Vitale, global head of foreign exchange at BNY Mellon, said in a statement that digital assets will continue to become more embedded in global markets, noting that this collaboration aligns with the company’s wider strategy to develop a digital asset capability for clients across the entire trade life cycle.



The news comes after BNY Mellon, which has $45 trillion assets under custody, <a href="https://cms.blockworks.co/bny-mellon-offer-bitcoin-custody-this-year/" target="_blank" rel="noreferrer noopener">formed a digital assets unit</a> in February. The Wall Street goliath revealed at the time that it was developing a client-facing prototype that is designed to be the industry&#8217;s first multi-asset digital custody and administration platform for traditional and digital assets.



&#8220;BNY Mellon is one of the oldest and most widely respected financial institutions in the country, so its commitment to developing digital asset capabilities for its clients speaks volumes to the maturation of the crypto ecosystem as a whole,” Unstoppable Domains co-founder Brad Kam told Blockworks. “Banks need to innovate to compete, and those that haven’t announced plans to introduce crypto offerings are likely already working on plans and partnerships behind the scenes.”



BNY Mellon joins State Street’s Currenex unit, which Pure Digital selected in April to provide the trading infrastructure for its newly launched wholesale digital currency trading platform.&nbsp;



“I think that the move by BNY Mellon is telling in that they’ll be working with other banks,” said Jason Mochine, director of Marchare, a sales consultancy specializing in FinTech within the capital markets and digital asset arenas. “The only time the banks agree to play together is when they are facing significant joint challenges and market change.”



State Street, which has about $40 trillion under custody, has pushed further into the cryptocurrency space since announcing its partnership with Pure Digital by <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">launching a new division</a> focused on the shift to digital finance last month. State Street CEO Ron O’Hanley has called digital assets “a trend that’s here to stay.”



Fidelity’s digital assets division was <a href="https://cms.blockworks.co/fidelitys-digital-assets-division-reportedly-plans-to-boost-staff/" target="_blank" rel="noreferrer noopener">reportedly looking to increase headcount</a> as part of a push to leverage DeFi, tokenized assets and other blockchain capabilities. Bank of America launched a <a href="https://cms.blockworks.co/bank-of-america-launches-cryptocurrency-research-effort/" target="_blank" rel="noreferrer noopener">cryptocurrency research effort</a> earlier this month and was reportedly starting to allow certain clients <a href="https://cms.blockworks.co/bank-of-america-reportedly-to-offer-bitcoin-futures-trading/" target="_blank" rel="noreferrer noopener">to trade bitcoin futures.</a>



“Undoubtedly all banks will end up having to connect to infrastructure that can handle traditional and digital assets as the latter matures and, over time, replaces the former,” Mochine told Blockworks.



The Pure Digital platform will be a fully automated, high throughput OTC market for digital assets and cryptocurrencies with physical delivery and bank custody, the firm has explained. Its final platform, which is subject to regulatory approval, will leverage the firm’s FX trading industry infrastructure to offer users with stability, security, transparency and capital efficiency, the firm explained.



“As more top-tier banks join our initiative, we move closer to having an efficient wholesale crypto market,” Pure Digital CEO said in a statement, “which will ultimately lead to a more stable and mature asset class.”&nbsp;



A BNY Mellon spokesperson declined to comment and a representative for Pure Digital did not immediately respond.

BNY Mellon to Collaborate With Interbank Marketplace Pure Digital

Morgan Chittum

<div id="highlights-block_60f8532dbfad7" class="highlights">
 <ul>
 <li>Bitcoin is up 10% while ethereum jumped around 13% at press time </li>
 <li>Bitcoin had not traded below 30,000 since a volatile shakeout on June 22</li>
 </ul>
 
</div>



Bitcoin returned to its month-long trading range on Wednesday after buying pressures pushed the digital coin back above $31,000.



The cryptocurrency tumbled below $30,000 on Monday night after news broke of further attempted regulatory clampdowns on the asset class at large, including BlockFi’s cease-and-desist <a href="https://www.forbes.com/sites/stevenehrlich/2021/07/19/new-jersey-attorney-general-prepares-cease-and-desist-order-against-multi-billion-dollar-bitcoin-financial-services-platform/?sh=2fa6056321a5" target="_blank" rel="noreferrer noopener">order</a> from New Jersey’s attorney general.&nbsp;



“After the BlockFi news broke out, miners seemed to have moved a large number of bitcoins to exchanges overnight — around 32,000 Bitcoins, which put more selling pressure in the market,” BKCoin Capital founding principal, Kevin Kang, told Blockworks. “We haven’t seen a cascade of liquidations as we’ve seen earlier this year and muted reaction in both basis and funding rates shows that leverage has mostly been washed out since May 19.”



Bitcoin had not traded below $30,000 since its volatile <a href="https://cms.blockworks.co/north-american-miners-get-buy-rating-despite-bitcoin-price-slump-low-hashrate/" target="_blank" rel="noreferrer noopener">shakeout</a> on June 22.



Signals of further institutional adoption could have triggered crypto’s early morning rally. BNY Mellon has joined State Street and four other banks in offering custody support to a new crypto trading platform, Pure Digital. Following the <a href="https://www.ft.com/content/e02f954e-e30f-4d7e-a88e-801474dcfe27" target="_blank" rel="noreferrer noopener">Financial Times</a> report, Bitcoin jumped 10%. Ethereum was up 13% as well.



Bullish sentiments could also have been brought on by a slew of successful crypto-related funding rounds, announced Tuesday. FTX closed a $900 million<a href="https://cms.blockworks.co/ftx-closes-900m-series-b-round-valuing-exchange-at-18b/" target="_blank" rel="noreferrer noopener"> funding round</a>, the largest raise in crypto exchange history. This brings the trading platform to a $18 billion valuation. And fintech firm Titan raised $58 million in a funding round led by VC giant Andreessen Horowitz.&nbsp;



“It&#8217;ll be interesting to see if this support will keep its strength. If it tests the support again, we would probably not see such a bounce and face a sell-off to $23k,” Cryptohopper CEO Ruud Feltkamp said in a note. “While trading in the summer usually isn&#8217;t that interesting, there&#8217;s a lot of uncertainty in the market.”



Bitcoin was trading at $32,841.19 at press time.&nbsp;



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Bitcoin Rallies After Short-Lived Dip Below $30K

<div id="highlights-block_60c3b1ed1751f" class="highlights">
 <ul>
 <li>State Street CEO Ron O’Hanley has labeled digital assets as “a trend that’s here to stay.”</li>
 <li>New division to expand capabilities to include crypto, CBDC, blockchain, and tokenization.</li>
 </ul>
 
</div>



State Street, a custody bank that oversees $40 trillion in assets, has launched a new division focused on the shift to digital finance.



CEO Ron O’Hanley said in a statement that he expects digital assets to be one of the most significant forces impacting financial services over the next five years, noting that it is critical to have tools in place as it becomes integrated into the industry’s existing framework.



“As the financial industry is transforming to a digital economy with decentralized finance, digital currencies and tokenization will only continue to gain momentum,” a spokesperson told Blockworks. “The custodians of the future will evolve from recordkeepers and intermediaries to curating a digital ecosystem based on data and intelligent technology offerings and data integration.”



Fintech and the pandemic have accelerated the unbundling and digitization of financial services, the representative added, which has led to the need for the industry’s operating models, technology platforms and service models to evolve.



O’Hanley had noted during State Street’s earnings call in April that the space was “a trend that’s here to stay.”



“We’re very active in thinking about how do we move from custody, something that’s physical or near physical to custodying a token, and what does that mean for us?,” he told analysts at the time. “So it’s a very, very important part of our [research and development], and it’s a very, very important part of our share online now.”



The new division, called State Street Digital, will focus on expanding its capabilities to include crypto, central bank digital currency, blockchain, and tokenization. State Street plans to upgrade its GlobalLink technology platform to support crypto assets and other asset classes.



Nadine Chakar will lead the unit. The 30-year industry veteran became the company’s head of global markets in 2019 after working for several years as global head of operations and data at Manulife Investment Management, according to <a href="https://www.linkedin.com/in/nchakar/" target="_blank" rel="noreferrer noopener">her LinkedIn profile</a>. 



Chakar brings deep experience in running custody and accounting businesses as well as operating asset manager back offices, a State Street spokesperson said. State Street Digital currently comprises about 425 global professionals, and the company anticipates adding roles in the coming months.



“We have been developing a number of digital capabilities and other solutions as well as partnering and investing in the infrastructure that forms the foundation of State Street Digital,” Chakar said in a statement.



The new department comes after the custody bank and asset manager has gradually stepped into the digital assets space in recent years.&nbsp;



State Street in 2018 partnered with Lukka, a crypto reference data provider, to develop comprehensive digital asset fund administration services. Lukka <a href="https://cms.blockworks.co/lukka-hires-former-state-street-global-head-as-cfo/">recently named</a> Kinga Bosse, State Street’s former global head of strategic investments and partnerships, as its chief financial officer. The custody bank also <a href="https://cms.blockworks.co/state-street-lends-tech-to-institutional-crypto-trading-platform/">lent forei</a><a href="https://cms.blockworks.co/state-street-lends-tech-to-institutional-crypto-trading-platform/" target="_blank" rel="noreferrer noopener">gn</a><a href="https://cms.blockworks.co/state-street-lends-tech-to-institutional-crypto-trading-platform/"> exchange technology</a> to institutional crypto trading platform Pure Digital earlier this year.



The financial services titan was also appointed in March as the fund administrator and transfer agent of the VanEck Bitcoin Trust, a proposed ETF that awaits to be greenlit by the Securities and Exchange Commission.



State Street CFO Eric Aboaf said during the April earnings call that the company could bring a level of credibility to the space <a href="https://cms.blockworks.co/exploring-secs-bitcoin-etf-resistance/" target="_blank" rel="noreferrer noopener">as US regulators decide</a> on whether or not to approve the various crypto ETFs in registration.



“We’ve got a strong pipeline of clients because these are, by and large, our clients who are innovating in crypto ETF,” he said. “We think that’s a real area of white space where we can lean in and both support our clients and also be a real important participant and player in one of the emerging spaces.”



BNY Mellon, the world’s largest custodian bank and oldest bank in the US, said in February it would <a href="https://cms.blockworks.co/bny-mellon-offer-bitcoin-custody-this-year/" target="_blank" rel="noreferrer noopener">store and move cryptocurrencies</a> for its asset manager clients

State Street Launches Digital Finance Unit for Crypto

<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.