America’s 2nd Oldest Bank Building Bitcoin Trading Platform

The United States’ second-oldest bank, State Street, is just the latest to join the crypto boom. 

State Street Makes Crypto Play 

The company’s trading technology provider, Currenex, will be providing infrastructure for a new crypto trading platform called Pure Digital. 

According to the press release, Pure Digital “will be a fully automated, high throughput OTC market for digital assets and cryptocurrencies with physical delivery and bank custody.” It’s set to launch in mid-2021. 

David Newns, Global Head of Execution Services for GlobalLink, State Street Global Markets, said of the update: 

“Currenex is thrilled to leverage our experience and expertise in the FX and digital asset trading marketplace to provide Pure Digital with robust technology and infrastructure for this exciting digital currency trading initiative.” 

Pure Digital will be multi-custodial, and there’ll be a “smart custody routing mechanism” for those who opt to trust the platform with their crypto. 

Many crypto services such as Coinbase target institutional investors with custody solutions. The custodial and Over-the-Counter offering suggests that Pure Digital will primarily focus on the institutional market rather than retail. 

“Institutional participants will trade on the platform utilizing bilateral credit enabling efficient capital utilization and control for all trading participants,” the statement from State Street said. 

Institutional Shake-Up

Institutions will be able to use bilateral credit, something Bitcoin veteran Caitlin Long raised concerns about. “BEWARE: FRACTIONAL RESERVE BITCOIN IOUs coming,” she wrote on Twitter today. “Won’t end well for the banks.” Bilateral credit involves two organizations, usually banks, extending their credit limit with one another over a set time period. This allows one bank to borrow more than the credit limit since the second bank still has a debt to pay them.

The announcement also suggests that State Street is taking a long-term view on the crypto space. Campbell Adams, the founder of Pure Digital, said that the two companies “share the same vision for the future of the digital currency market.” The release notes suggest that they have plans to “further explore” the space. 

It’s not yet clear to what degree State Street will be involved in the platform, but the focus on institutions suggests that it could commence trading and custodial services. 

State Street wouldn’t be the first major institution to adopt crypto. BNY Mellon announced it would be launching a crypto custody service in February, while the 169-year-old insurance firm MassMutual made a $100 million Bitcoin purchase towards the end of last year.

Most recently, Morgan Stanley and Goldman Sachs have shared their plans to offer Bitcoin to wealthy clients. 

State Street manages over $3 trillion in assets.