Leading Custodian Banks State Street and Citi to Enter Crypto Custody as Early as Next Year

The largest custody banks on Wall Street are weighing crypto custody following the recent SAB121 scrap, with State Street to proceed as early as 2026.

Thanks to easing regulations, financial institutions are finally getting their long-desired exposure to digital assets. Two of the largest custody banks in the world have teased the idea of launching crypto custodian services for their clients.

A recent report shows that State Street, the second-largest custody bank in the world, will begin custodying Bitcoin and other cryptocurrencies for its clients in 2026. Citi Bank, the fourth-largest custody bank in the world, will also venture into the enterprise at an undisclosed time.

Banks Get Much-Desired Crypto Exposure

Traditional financial institutions have pursued cryptocurrency exposure for several reasons, with one reason being the sector’s growing institutional adoption and the need to retain customers seeking Bitcoin exposure.

State Street, with $46 trillion in assets under custody (AUC), has been interested in crypto custody long before now. According to a recent survey, State Street clients have shown an increased appetite for crypto custody and tokenization, fueling its scramble to enter the growing sector.

Last year, the custodian bank partnered with Taurus to bolster its capabilities for crypto custody. The bank appointed a new digital asset director in October, replacing Nadine Chakar, who left in 2022 to join Securrency.

Citi Bank has also made considerable efforts to enhance its competitiveness on the digital asset front. The custodian bank partnered with Metaco—one of Ripple’s latest acquisitions—in 2022 to offer crypto-related services. 

Furthermore, the $25 trillion AUC bank launched the Citi Integrated Digital Assets Platform (CIDAP) and rolled out its digital token for on-chain asset tokenization.

Nonetheless, the duo has failed to record definitive progress like BNY Mellon, the world’s largest custodian bank. BNY Mellon secured a regulatory exemption last September to hold Bitcoin and Ethereum ETFs for its clients.

Growing Foray Amid SAB 121 Repeal

Meanwhile, this bullish development comes after the recent Staff Accounting Bulletin 121 (SAB 121) repeal by the US Securities and Exchange Commission (SEC). Under acting chair Mark Uyeda, the securities watchdog scrapped the law stopping banks from holding digital assets on their balance sheets.

Moreover, the regulatory landscape in the United States has metamorphosed from hostile to friendly. Banking regulators, including the Federal Reserve System, have reassured banks that they can meddle with the crypto industry as long as they adhere to existing rules.