Be prepared. That is the motto drummed in to anyone who joins the Cub Scouts at a young age and it becomes embedded for life. Be prepared.
This sums up the attitude relating to digital assets at State Street, and helps explain its recent launch of a digital asset pilot with Gemini Trust Company, the vehicle used by Tyler and Cameron Winklevoss of The Social Network fame in their ongoing attempts to maximize the monetary potential that is perceived to exist in cryptocurrencies.
Ralph Achkar, Managing Director, Digital Product Development & Innovation at State Street, is in charge of the pilot. He explains that State Street is not seeking to drive this potential new market but is making suitable preparations in order to be ready to service new and growing demand from asset managers active in more traditional assets.
“We have seen a change in demand from certain clients over the past 18 months or so as they wake up to the possibilities that could exist in digital assets and this ties in with our own view,” says Achkar.
“We see three areas of possible impact in the market. One, the impact that digital assets might have on cash, central bank cash and commercial everyday cash. Two, the impact of tokenization on equities, bonds and even, in the longer term, more esoteric physical assets. Three, the impact on financial services providers such as ourselves, our peer group and others.
“Today’s value chain will change. Some activities in the chain will become redundant. Others must transform. Demand is starting to shift. Our industry must shift with it.
“We have already started to prepare with work on a number of components, for example, being a consortium member in Fnality as part of the answer to the question about the possible impact on cash. The digital asset pilot is one of the answers to the question about the possible impact on service providers.”
As reported here at the time, State Street announced in mid-December a new digital asset pilot in collaboration with Gemini Trust Company, LLC (Gemini), a cryptocurrency exchange and custodian. It says the pilot builds on ongoing research and development in the digital asset space to combine Gemini Custody with State Street’s back office reporting.
The first of its kind, this pilot performs reporting scenarios on a user’s holdings within Gemini Custody. Initially, the pilot reports holdings of two cryptocurrencies chosen for liquidity reasons. However, it can be adapted to report on holdings of other digital assets, such as security tokens. It allows the user to consolidate the reporting of their digital assets serviced by Gemini, an independent digital asset custodian, with their traditional assets serviced by State Street.
“We want to learn and to evolve our business with our clients’ needs. The digital asset space is still nascent, yet it promises opportunities that could fundamentally impact how we do things in the future,” says Achkar.
“There is small, but growing demand from our clients for solutions of this type and many technical, operational, regulatory, and legal considerations to be addressed. That is why we have opted for an open model, and started a pilot with Gemini as an established, regulated player in the digital asset space. They are trying to target customers that we want to help.”
“Given State Street’s position in asset servicing, this project felt like a natural extension of those services as we continue to explore and evaluate opportunities to provide innovative solutions to our clients. The open model means that we can work with other digital wallets and Gemini can work, if it so wishes, with other banks.”
Said Tyler Winklevoss, CEO of Gemini: "Working with State Street is a major milestone for Gemini and digital assets as a mainstream asset class. With trillions of dollars in assets, State Street will never compromise on security - and neither will we.
"Traditional investors will more seamlessly be able to allocate capital in their portfolio to digital assets through trusted and regulated financial institutions - helping us build a better bridge to the future of money."
“Change is coming,” adds Achkar. “Maybe not tomorrow, or the day after, but it is coming. We must be prepared.”
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Be prepared. That is the motto drummed in to anyone who joins the Cub Scouts at a young age and it becomes embedded for life. Be prepared.
This sums up the attitude relating to digital assets at State Street, and helps explain its recent launch of a digital asset pilot with Gemini Trust Company, the vehicle used by Tyler and Cameron Winklevoss of The Social Network fame in their ongoing attempts to maximize the monetary potential that is perceived to exist in cryptocurrencies.
Ralph Achkar, Managing Director, Digital Product Development & Innovation at State Street, is in charge of the pilot. He explains that State Street is not seeking to drive this potential new market but is making suitable preparations in order to be ready to service new and growing demand from asset managers active in more traditional assets.
“We have seen a change in demand from certain clients over the past 18 months or so as they wake up to the possibilities that could exist in digital assets and this ties in with our own view,” says Achkar.
“We see three areas of possible impact in the market. One, the impact that digital assets might have on cash, central bank cash and commercial everyday cash. Two, the impact of tokenization on equities, bonds and even, in the longer term, more esoteric physical assets. Three, the impact on financial services providers such as ourselves, our peer group and others.
“Today’s value chain will change. Some activities in the chain will become redundant. Others must transform. Demand is starting to shift. Our industry must shift with it.
“We have already started to prepare with work on a number of components, for example, being a consortium member in Fnality as part of the answer to the question about the possible impact on cash. The digital asset pilot is one of the answers to the question about the possible impact on service providers.”
As reported here at the time, State Street announced in mid-December a new digital asset pilot in collaboration with Gemini Trust Company, LLC (Gemini), a cryptocurrency exchange and custodian. It says the pilot builds on ongoing research and development in the digital asset space to combine Gemini Custody with State Street’s back office reporting.
The first of its kind, this pilot performs reporting scenarios on a user’s holdings within Gemini Custody. Initially, the pilot reports holdings of two cryptocurrencies chosen for liquidity reasons. However, it can be adapted to report on holdings of other digital assets, such as security tokens. It allows the user to consolidate the reporting of their digital assets serviced by Gemini, an independent digital asset custodian, with their traditional assets serviced by State Street.
“We want to learn and to evolve our business with our clients’ needs. The digital asset space is still nascent, yet it promises opportunities that could fundamentally impact how we do things in the future,” says Achkar.
“There is small, but growing demand from our clients for solutions of this type and many technical, operational, regulatory, and legal considerations to be addressed. That is why we have opted for an open model, and started a pilot with Gemini as an established, regulated player in the digital asset space. They are trying to target customers that we want to help.”
“Given State Street’s position in asset servicing, this project felt like a natural extension of those services as we continue to explore and evaluate opportunities to provide innovative solutions to our clients. The open model means that we can work with other digital wallets and Gemini can work, if it so wishes, with other banks.”
Said Tyler Winklevoss, CEO of Gemini: "Working with State Street is a major milestone for Gemini and digital assets as a mainstream asset class. With trillions of dollars in assets, State Street will never compromise on security - and neither will we.
"Traditional investors will more seamlessly be able to allocate capital in their portfolio to digital assets through trusted and regulated financial institutions - helping us build a better bridge to the future of money."
“Change is coming,” adds Achkar. “Maybe not tomorrow, or the day after, but it is coming. We must be prepared.”
