Dominance Race in Crypto Custody Services Heats Up on Wall Street

The race for leadership in crypto custody services is accelerating on Wall Street, with financial giants rushing to offer services that were once off-limits. The latest to make their move are State Street and Citi, two of the world’s largest custodian banks.

State Street, managing $46.6 trillion in assets, and Citi, with $25 trillion in custody, have both announced plans to launch crypto custody services.

This move signifies a major shift in the industry, as years of regulatory barriers had kept major financial institutions on the sidelines.

Citi and State Street’s Crypto Custody Plans

According to a report by The Information, State Street plans to launch its crypto custody services by 2026.

The firm established a dedicated digital assets division in 2021 and briefly partnered with UK-based Copper for custody technology. However, regulatory uncertainty forced the firm to shelve its plans in 2023.

Meanwhile, Citi has been exploring blockchain-based initiatives. The bank previously collaborated with Singapore-based BondbloX for tokenized bond custody and worked with Metaco on digital asset custody; Metaco was later acquired by Ripple.

Citi’s crypto strategy had been quieter compared to its peers, but recent developments suggest the bank is now focused on the sector with renewed innovation.

The Repeal of SAB 121 Opens the Door for Banks

Wall Street’s shift toward crypto can largely be attributed to the recent repeal of SAB 121, a SEC rule that restricted banks from offering crypto custody services.

Introduced in 2022, SAB 121 effectively prevented traditional banks from entering the crypto custody market, while granting exceptions to select firms like BNY Mellon. Critics argued the rule stifled innovation and gave regulators excessive control over the market.

However, with the Trump administration’s repeal of SAB 121, banks are now free to participate in crypto custody, paving the way for giants like Citi and State Street to enter the sector.

A Pro-Crypto Shift on Wall Street

For years, banks had approached crypto cautiously, wary of regulatory scrutiny and reputational risks. But with the lifting of restrictions and growing institutional demand for secure digital asset custody, the landscape has changed.

With a crypto-friendly president in office and regulatory barriers falling, Wall Street’s biggest players are no longer sitting on the sidelines—they are moving in.

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Shinawatra did not suggest that Thailand should buy cryptocurrencies but emphasized the importance of understanding digital assets and the global digitalization trends. He stated, “There are already many cryptocurrencies. Some people say that in the future, we will have more currencies than countries. Thai people must think and understand this.”

He also highlighted that the incoming Trump administration’s trade tariffs and the idea of paying off the national debt with Bitcoin make understanding the digital economy even more critical.

Thailand’s Digital Economy Initiatives

• August 2024: The Thailand Securities and Exchange Commission (SEC) announced a regulatory sandbox for crypto service providers, creating a testing environment for experimental financial technologies.
• July 2024: The Pheu Thai Party distributed digital cash worth 10,000 baht (approximately $280) to 45 million residents as an economic stimulus.
• September 2024: Kasikornbank, Thailand’s second-largest bank, launched the country’s first licensed crypto custody service for digital asset businesses.
• October 2024: The Thailand SEC proposed allowing investment funds to access crypto investments.
• October 2024: The Bank of Thailand partnered with the Hong Kong Monetary Authority (HKMA) to test tokenized cross-border payments, as part of HKMA’s Project Ensemble.

These developments reflect Thailand’s proactive efforts in crypto regulations and the digital economy, showcasing its dedication to innovation and adaptation in the global financial landscape.

You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.

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