Finance

State Street sets ‘extremely high bar’ for crypto ETFs: ‘Until we’re comfortable, we will not launch’

State Street’s exchange traded funds business is considering how it can tap into growing client demand for cryptocurrencies such as bitcoin. However, one of its top executives in Europe says the bar is “extremely high” for it to launch products that will offer investors exposure.

Matteo Andreetto, who heads State Street’s SPDR ETF business across Europe, the Middle East and Africa, said a working group comprised of various investment teams across State Street Global Advisors — the US bank’s $3.6tn asset management division — has been exploring cryptocurrencies for “quite some time”, including discussions with institutional investors.

“The bar is extremely high for us. We are trying to figure out how we can look at this space through our various lenses, rather than adapt ourselves,” Andreetto told Financial News.

“If we ever launch crypto ETFs from SSgA or SPDR, robustness, liquidity and reliability must be there. We are never going to be the first to launch a product. We are a bit more cautious.”

READ Bitcoin, banks and blockchain: Here’s what Goldman Sachs, JPMorgan and others are planning

He added: “Some of the large wealth managers are looking to us. Until we are comfortable with something, we will not launch.”

State Street’s ETF business is the third largest provider in the US, with more than $960bn of assets according to data from consultancy ETFGI. In Europe, SPDR has a much smaller haul, with around $61bn making it the seventh largest player in the region.

Exchange traded product providers are among those looking to cater for rising demand among investors for cryptocurrency exposure.

Swiss issuer 21Shares said on 7 June it will launch its bitcoin ETP on Aquis Exchange in London and Paris this summer, while ETC Group launched its first bitcoin ETP in the UK this month, also on Aquis.

21Shares and Aquis said they plan to make more cryptocurrency-exposed ETPs available for investors, including for tokens such as ether, ripple, polkadot and cardano.

State Street announced on 10 June that it had launched a digital division to help its clients to begin trading crypto and digital currencies.

The Boston-headquartered custody bank said the new business unit, headed up by industry veteran Nadine Chakar, will “build on the bank’s current digital capabilities and will expand to include crypto, central bank digital currency, blockchain, and tokenization.”

READCrypto ‘Wild West’ needs taming ahead of a UK bitcoin ETF 

State Street’s move follows similar steps by other large banks.

BNY Mellon announced in February that it was developing a client-facing prototype that is “designed to be the industry’s first multi-asset digital custody and administration platform” for cryptocurrencies.

Meanwhile Northern Trust and Standard Chartered last year partnered to launch Zodia, a cryptocurrency custodian for institutional investors. More recently, Standard Chartered announced plans to launch a digital asset brokerage and exchange platform for UK and European institutional and corporate clients.

Morgan Stanley earlier this year said it would give its wealth management clients access to three bitcoin funds — two of which will be offered by Galaxy Digital.

Andreetto added: “The steps [State Street] has taken in terms of creating the digital division and looking at the infrastructure, are good steps. Without these foundations, it would be premature to think about adding a SPDR product in this space.”

To contact the author of this story with feedback or news, email David Ricketts

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