State Street , a global custody bank, has partnered with Taurus , a specialist in cryptocurrency custody and tokenization, to enhance its digital asset services. This decision is made in anticipation of a more favourable regulatory environment in the US.

Initially, State Street plans to launch tokenized versions of traditional assets, with the first client announcement expected soon. As a custody bank, State Street has a natural interest in managing digital assets, but US banks face challenges due to the Securities and Exchange Commission’s (SEC) proposed Staff Accounting Bulletin 121 (SAB 121). This bulletin imposes strict requirements on companies holding customers' crypto assets, potentially leading to significant capital requirements.

State Street has expressed concerns about SAB 121, noting that it could impose heavy capital burdens on banks holding crypto assets. The bank has indicated that while its initial focus is on tokenization, it plans to offer digital custody services once US regulations permit. The bank emphasizes that it handles custody services off-balance sheet, meaning these assets are not part of its balance sheet.

About the companies Taurus, based in Switzerland, highlights the advantages of tokenization, including continuous trading and improved collateral management, while also acknowledging the need for better regulatory conditions in the US The partnership with State Street is seen as a potentially positive development for US financial markets, which have been slower to adapt due to SAB 121. State Street has a longstanding involvement in blockchain technology and digital assets, having previously collaborated with crypto custody firm Copper before the latter shifted its focus to the ClearLoop settlement system. .