State Street and Citi are making waves in the financial industry by considering offering crypto custody services to institutional investors, traders, and large funds. These traditional banks are looking to provide safekeeping solutions for digital assets like Bitcoin and Ethereum, expanding their services beyond traditional stocks and bonds.
State Street, one of the world’s largest custody banks, plans to launch its crypto custody services next year. This move signifies a growing trend of traditional financial institutions entering the crypto space. Additionally, BNY Mellon, another major player in the custody services industry, is looking to broaden its offerings to include a wider range of tokens, beyond just Bitcoin and Ethereum.
Citi, the third-largest bank in the US, is also exploring opportunities in the crypto custody space. Sources cited in a recent report suggest that Citi is considering developing its own custody services while also exploring partnerships with external firms. This strategic approach aligns with Citi’s recent proof of concept on tokenizing private funds in collaboration with Wellington Management and WisdomTree.
The successful completion of this proof of concept demonstrates Citi’s interest in leveraging blockchain technology to address inefficiencies in private markets. By bringing a Wellington-issued private equity fund onto a blockchain network and embedding fund distribution rules within smart contracts, Citi is at the forefront of innovation in the financial industry.
Galaxy Digital’s head of research, Alex Thorn, predicts that large banks like Citi will continue to move into crypto services in response to increasing institutional interest in digital assets. Thorn’s 2025 predictions highlight the potential for the top four custody banks to add crypto-related services this year, with regulatory support from the Office of the Comptroller of the Currency (OCC).
As the financial industry evolves to embrace digital assets, traditional banks like State Street and Citi are poised to play a significant role in providing secure custody solutions for institutional investors and traders. This shift towards crypto services reflects a broader trend of integration between traditional finance and the digital asset ecosystem.