State Street, the second oldest operating bank in the United States, is entering the cryptocurrency industry by agreeing to provide its technology for a new crypto trading platform.
Currenex, a State Street-owned forex technology provider, has entered into an agreement with crypto firm Puremarkets to provide its trading infrastructure and technology for the new Pure Digital crypto trading platform. Announcing the news on Thursday, Pure Digital said it will also work with State Street to further explore the digital currency trading industry.
According to the announcement, Pure Digital will be a fully automated OTC market for digital assets and cryptocurrencies with physical delivery and bank custody. Scheduled for launch in mid-2021, the new platform would allow institutional investors to trade using bilateral credit and multiple custody solutions. “Trading participants will be free to take advantage of their preferred digital asset custody solutions and manage risk through an intelligent custody routing mechanism,” the announcement notes.
State Street announced in late March that the bank had explored the role of Bitcoin (BTC) in multi-asset wallets for the past nine years. “The case has yet to be made for Bitcoin as an equity hedge, although it may be headed in that direction. The key for investors is to combine their preferences for risk mitigation and upside potential with the expected diversification and return properties of Bitcoin to determine their optimal allocation, ”the bank wrote.
State Street has actively explored the cryptocurrency industry in recent years. At the end of 2019, the bank announced a digital asset pilot project in collaboration with Gemini Trust Company. The pilot project leveraged research and development in the digital asset space to combine Gemini Custody with State Street back-office reporting.
Earlier this year, Bank of New York Mellon announced its intention to hold, transfer and issue Bitcoin and other cryptocurrencies as an asset manager on behalf of its clients.