State Street has severed ties with cryptocurrency custody firm Copper following the latter’s announcement of shutting down its enterprise infrastructure division on Thursday.
State Street and Copper announced their partnership last year, and at the time, State Street stated that it planned to use Copper’s technology to create and launch (pending regulatory and other approvals) an institutional grade digital custody offering where clients could store and settle their digital assets within a secure environment run by the bank.
State Street Ends Partnership At The Height Of Crypto Scrutiny
State Street stated that the relationship had concluded mutually owing to the changing regulatory environment for digital assets, which also altered the criteria for servicing this asset class, and that it would continue to work on a solution for tokenized securities and native tokens.
The bank said in a statement:
“State Street and Copper have mutually decided to end their licensing agreement and both companies will continue to build on their digital strategies within their own respective product development approaches.”
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Copper’s partnership with State Street, one of the biggest custody banks in the world, was seen as a big win for the London-based crypto firm, whose chairman is the former U.K. Chancellor of the Exchequer, Philip Hammond.
Crypto Uncertainty Rattles Banking Industry
Several of the crypto industry’s devoted financial partners have faltered or pulled back from crypto businesses as a result of the recent wave of uncertainty.
While cryptocurrencies like Bitcoin and Ethereum have gained significant mainstream attention and investment in recent years, banks remain wary of the risks associated with the emerging asset class.
The decision by some banks to step away from cryptocurrency partnerships follows a number of high-profile incidents involving hacking, fraud, and theft in the cryptocurrency market. These incidents have raised concerns about the security and stability of digital assets, as well as the potential for illegal activity.
Additionally, some banks have expressed concerns about the lack of regulatory oversight in the cryptocurrency market. While some countries have taken steps to regulate cryptocurrencies, the market remains largely unregulated in many jurisdictions.
Crypto total market cap at $1.14 trillion on the daily chart at TradingView.com
Despite these concerns, some banks are still exploring partnerships with cryptocurrency firms, recognizing the potential for growth and innovation in the space.
However, the decision by some banks to distance themselves from cryptocurrency underscores the challenges facing the industry as it seeks to gain wider acceptance and legitimacy in the financial world.
In these lines, on Thursday, Copper unexpectedly announced it would be winding down its enterprise infrastructure business that linked financial institutions like banks and hedge funds to digital assets. It is instead devoting resources to growing its Clear Loop custody and settlement operations.
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