State Street and Copper End Partnership
US financial giant State Street has said it has ended its partnership with UK-based cryptocurrency custody firm Copper. Coindesk reported on the 17th.
State Street and Copper have mutually terminated their licensing agreements and will now develop their own products as they work on digital assets.
State Street plans to continue working on tokenized securities and various native token solutions. “The regulatory environment for digital assets continues to evolve, and the requirements for servicing this asset class are changing,” said a company spokesperson.
In 2021, State Street will establish a digital finance division that handles cryptocurrencies and blockchains, and will begin full-scale cryptocurrency-related businesses. Currently, it deals with various fields such as distributed ledger technology, virtual currency, CBDC (Central Bank Digital Currency), blockchain, and tokenization.
For example, we are developing virtual currency accounts such as Bitcoin (BTC) and Ethereum (ETH), providing virtual currency trading infrastructure for institutional investors, and developing custody.
What is custody
Refers to holding and managing assets on behalf of investors. A term widely used for assets other than virtual currency. It refers to a service that performs a wide range of operations, such as asset custody, settlement related to trading, receipt of principal and interest, dividends, and exercise of voting rights. A company that performs custody is called a custodian.
▶️Cryptocurrency Glossary
Copper business restructuring
On the 17th, Copper just announced a business restructuring due to a change in business strategy. We will reduce the number of employees and will focus on the custody business and “Clear Loop,” a service that provides cryptocurrency off-exchange trading and settlement networks. Copper said that since the end of 2022 there has been a significant increase in transaction volumes and the number of customers in these businesses.
A division that provides services to banks and funds will be liquidated, a person familiar with the matter said. In his official announcement, Copper explained the reasons for the restructuring:
Due to the current difficult situation in the cryptocurrency sector, the uncertain US regulatory environment, and our desire to strategically deploy our services, we are in the process of streamlining our operations.
Copper CEO Dmitry Tokarev said the company will continue to focus on institutional investment services.
We will continue to focus more than ever on providing high-quality digital asset custody and prime services that meet the needs of institutional investors. It is regrettable that this strategic review in the current market environment has led to personnel reductions.
Alert to Banks
Copper also referred to the “opaque US regulatory environment.” In the United States, government agencies are urging banks to exercise caution when handling deposits in the cryptocurrency industry.
In February, the US Federal Reserve (FRB), US Federal Deposit Insurance Corporation (FDIC), and US Office of the Comptroller of the Currency (OCC) jointly pointed out the liquidity risks that cryptocurrencies pose to banks, and banks are encouraged to take action against the cryptocurrency industry. It is necessary to appropriately manage the risk of related deposits.
In addition, the Federal Deposit Insurance Corporation (FDIC) is currently aiming for a full sale of Signature Bank, which has been shut down by New York State authorities, to a private company, but the acquisition condition is “continuing relationships with customers in the cryptocurrency sector. It has just been reported that there is a requirement to prohibit it.
connection: Signature Bank’s Acquisition Auction, “Abandonment of Virtual Currency Customers” Is an Additional Condition = Report
