State Street: 38% of Clients Will Put More Money into Digital Assets in 2020

The majority of asset managers that bank with State Street are interested in digital assets such as bitcoin, but none have asked the global custodian to store them yet.

"We're talking to them less about 'Can you custody this,' and more about how we can work together to make sure these changes aren't disruptive to our business models," said Jay Biancamano, State Street's managing director of digital product development and innovation.

State Street is interested in looking at fund administration, private placements, issuance and trading of digital assets, he said.

Despite their lack of interest in a custody solution, the Boston-based bank's clients are continuing to invest more in the new asset class.

According to a survey to be released next week, 94 percent of State Street clients hold digital assets or related products and 38 percent of them said they will increase their allocation of digital assets in 2020.

State Street is embracing digital assets as it retrenches from an effort to retrofit its plumbing using distributed ledger technology, a sign that Wall Street is moving away from the mid-decade mantra of "Blockchain not bitcoin."

This team's responsibilities were separate from that of Biancamano's team which focuses on working with clients and third parties around digital asset and tokenization proofs of concept.

"Being able to provide custody and servicing around digital assets is different than building our entire backend infrastructure and prioritizing our technology stack to support Hylperdeger blockchain," Biancamano said.

"They were parallel paths. ... We can continue to pursue digital assets and go into that business should we need to without having to have a number of DLT engineers. We still have the expertise on staff, but we put less emphasis on the infrastructure piece and more emphasis on the digital asset piece."

The firm's clients may also be more bullish on DLT than State Street is.