The global financial landscape is undergoing a transformative shift as traditional institutions increasingly embrace blockchain technology and digital assets. At the forefront of this evolution is State Street, one of the largest custodial banks in the United States, which has recently announced a strategic partnership with Swiss fintech firm Taurus to develop advanced crypto custody and tokenization services. This collaboration marks a significant step toward bridging conventional finance with the rapidly growing world of digital assets—starting with real-world assets (RWA).
A Strategic Move Toward Digital Asset Infrastructure
State Street, renowned for its institutional-grade financial services, is leveraging Taurus’s enterprise blockchain infrastructure to enable secure digital asset custody and the creation of tokenized financial products such as funds, bonds, and equities. By integrating Taurus’s regulated and scalable platform, State Street aims to offer clients a seamless way to issue, manage, and transfer tokenized securities while maintaining compliance and operational integrity.
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Although full-scale cryptocurrency custody remains constrained by current U.S. regulatory conditions—particularly due to SEC Accounting Bulletin 121 (SAB 121)—State Street is strategically focusing on RWA tokenization as an entry point. This approach allows the bank to build foundational infrastructure and client trust while awaiting clearer regulatory frameworks that would permit broader digital asset custody operations.
Donna Milrod, Chief Product Officer and Head of Digital at State Street, emphasized the long-term vision:
“While we’re starting with tokenization, this isn’t where we’ll stop. Once U.S. regulations evolve to support it, we’ll be ready to offer comprehensive digital custody services.”
This phased strategy reflects a growing trend among major financial players: using RWA tokenization as a compliant gateway into the digital asset ecosystem.
Why Real-World Assets Are the Gateway to Mass Adoption
Tokenizing real-world assets—such as real estate, private equity, bonds, or commodities—transforms traditionally illiquid investments into tradable, divisible, and transparent digital instruments on blockchain networks. This innovation brings several key benefits:
- Increased liquidity: Fractional ownership allows smaller investors to participate in high-value assets.
- Operational efficiency: Settlement times drop from days to minutes, reducing counterparty risk.
- Transparency and auditability: Every transaction is immutably recorded on-chain.
- Global access: Investors from different jurisdictions can access previously closed markets.
State Street’s focus on RWA aligns with rising institutional demand. According to a 2024 report by Boston Consulting Group, the tokenized asset market could reach $16 trillion by 2030, with over 90% of that value derived from traditional financial instruments brought on-chain.
With Taurus’s technology, State Street can facilitate the end-to-end lifecycle of tokenized securities—from issuance and custody to secondary market trading—on a secure, permissioned infrastructure compliant with international financial standards.
Taurus: Building the Backbone of Institutional Digital Finance
Founded in 2018 and regulated by Switzerland’s Financial Market Supervisory Authority (FINMA), Taurus has established itself as a leader in enterprise-grade digital asset infrastructure. The company provides institutional clients with a robust suite of blockchain-based solutions designed for scalability, security, and regulatory compliance.
Taurus serves more than 25 financial institutions globally and has been instrumental in advancing digital finance across Europe. Notably, Deutsche Bank partnered with Taurus in 2023 to co-develop digital asset custody solutions and participated in Taurus’s $65 million Series B funding round—underscoring strong institutional confidence in its platform.
Core Offerings from Taurus
- Taurus-PROTECT: A secure digital asset custody solution supporting hundreds of cryptocurrencies, stablecoins, NFTs, tokenized securities, and DeFi protocols. It features multi-layered encryption, air-gapped signing environments, and institutional-grade key management.
- Taurus-CAPITAL: A comprehensive platform for issuing and managing tokenized assets—including equity, debt, structured products, real estate, and physical commodities—enabling full lifecycle administration from creation to redemption.
- T-DX (Taurus Digital Exchange): A regulated trading facility for tokenized securities. While not a public exchange, it functions as a private market infrastructure enabling authorized participants to trade digitized financial instruments under strict compliance controls.
These tools empower banks like State Street to offer next-generation services without compromising on security or regulatory adherence.
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Navigating Regulatory Challenges in U.S. Crypto Custody
Despite growing interest in digital assets, U.S. banks face significant headwinds due to SAB 121, an SEC guidance issued in 2022 that requires banks holding crypto assets on behalf of customers to treat them as liabilities on their balance sheets. This rule effectively mandates that banks set aside capital equal to the full value of the crypto they hold—a costly requirement that discourages participation.
As a result, many large U.S. financial institutions, including State Street, have adopted a cautious stance. Instead of directly offering crypto custody, they are building capabilities in adjacent areas—especially asset tokenization—where regulatory ambiguity is lower and business use cases are clearer.
However, momentum is shifting. In mid-2024, the U.S. Office of the Comptroller of the Currency (OCC) signaled openness to revising SAB 121 interpretations, and several lawmakers have introduced bipartisan legislation aimed at clarifying digital asset custody rules. These developments suggest that full-service crypto custody by traditional banks may become viable within the next few years.
Future Outlook: From Tokenization to Full Digital Finance
State Street’s partnership with Taurus is more than a technical integration—it’s a strategic bet on the future of finance. As blockchain technology matures and regulations evolve, the line between traditional and digital finance will continue to blur. Institutions that invest in infrastructure today will be best positioned to lead tomorrow.
Potential future applications include:
- Tokenized money market funds
- On-chain bond issuance and settlement
- Cross-border payments using digital dollars
- Integration with decentralized finance (DeFi) protocols under regulated wrappers
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Such advancements promise not only operational efficiencies but also democratized access to capital markets worldwide.
Frequently Asked Questions (FAQ)
Q: What is RWA tokenization?
A: RWA (Real-World Asset) tokenization involves converting physical or traditional financial assets—like real estate, bonds, or commodities—into digital tokens on a blockchain. These tokens represent ownership and can be traded, transferred, or fractionalized efficiently and transparently.
Q: Why can’t U.S. banks offer crypto custody yet?
A: Due to SEC Accounting Bulletin 121 (SAB 121), U.S. banks must hold capital reserves equal to the full value of any crypto assets they custody for clients. This creates significant balance sheet pressure and risk exposure, discouraging most banks from offering such services until regulations change.
Q: What role does Taurus play in this partnership?
A: Taurus provides State Street with enterprise-grade blockchain infrastructure for secure digital asset custody, tokenization, and trading. Their FINMA-regulated platform enables compliant issuance and management of tokenized securities.
Q: Is State Street offering Bitcoin or Ethereum custody now?
A: Not directly. While State Street supports cash custody for Bitcoin ETFs, its current focus with Taurus is on tokenizing traditional assets (RWA). Direct crypto custody may come later if U.S. regulations evolve favorably.
Q: How does tokenization benefit investors?
A: Tokenization increases liquidity, reduces transaction costs, enables fractional ownership, and improves transparency. Investors gain access to diversified asset classes that were previously difficult or expensive to enter.
Q: Could this partnership lead to a State Street crypto ETF?
A: While not confirmed, State Street has already partnered with Galaxy Digital to explore new digital asset ETFs. As regulatory clarity improves, a crypto-focused ETF from State Street becomes increasingly plausible.
By combining decades of institutional expertise with cutting-edge blockchain technology, State Street and Taurus are laying the groundwork for a more inclusive, efficient, and innovative financial system—one tokenized asset at a time.