The three largest custody banks in the United States — BNY ($62.6 trillion AUC), State Street ($46.6 trillion AUC), and Citi — are simultaneously building crypto custody and staking infrastructure in 2026. Their combined assets under custody exceed $109 trillion, dwarfing the entire crypto market...
"We're hoping that in the next few quarters, we can come to market with a credible custody solution" — Biswarup Chatterjee, Global Head of Partnerships and Innovation, Citigroup
The three largest custody banks in the United States — BNY ($62.6 trillion AUC), State Street ($46.6 trillion AUC), and Citi — are simultaneously building crypto custody and staking infrastructure in 2026. Their combined assets under custody exceed $109 trillion, dwarfing the entire crypto market capitalization. The catalyst: the SEC's January 2025 rescission of Staff Accounting Bulletin 121, which had forced banks to record client crypto holdings as on-balance-sheet liabilities since March 2022, effectively making custody uneconomical under Basel III capital rules.
BNY announced on August 4, 2026, a partnership with Galaxy Digital to integrate staking directly into its custody platform. State Street selected Taurus as its infrastructure partner for a 2026 digital-asset custody launch. Citi has been building its custody product for three years and is targeting a mid-2026 launch. These moves place traditional custody banks in direct competition with crypto-native custodians — Coinbase ($376 billion in assets on platform), Anchorage Digital (the first OCC-chartered crypto bank), and BitGo — for the estimated $400 billion institutional crypto custody market.
The economic logic is straightforward. Ethereum staking yields 2.78–3.8% APR across 897,000 active validators. For a custody bank already charging basis-point fees on trillions, adding staking revenue to existing custody relationships creates a bundled product that crypto-native firms cannot replicate: custody, staking, fund accounting, tax reporting, and cross-margining with traditional assets under a single roof.
Staff Accounting Bulletin 121, introduced by the SEC in March 2022, required any institution custodying crypto assets to record them as liabilities on its own balance sheet. For banks operating under Basel III capital adequacy ratios, this made crypto custody prohibitively expensive: every dollar of client crypto required a corresponding dollar of capital reserves.
The SEC rescinded SAB 121 via SAB 122 in January 2025, allowing institutions to assess crypto custody risks under existing FASB and IAS contingency frameworks — the same treatment applied to holding client securities in street name. The effect was immediate. Within months, BNY expanded its Digital Asset Custody platform. State Street announced its custody build. Citi accelerated a three-year-old development effort.
In December 2025, the OCC granted national trust bank charters to five crypto-focused firms in a single action: Fidelity Digital Assets, BitGo, Coinbase, Crypto.com (as Foris Dax National Trust Bank), and Paxos. This was the first mass grant of federal trust charters to crypto firms, according to Davis Wright Tremaine's regulatory analysis published in August 2026. By February 2026, all five had received conditional approval.
BNY — $62.6 Trillion AUC. On August 4, 2026, BNY announced a strategic collaboration with Galaxy Digital to add staking to its Digital Asset Custody platform. The architecture keeps client assets within BNY's custody perimeter while Galaxy provides validator infrastructure. Galaxy reported $3.2 billion in staked assets as of March 31, 2026, and operates validators across Ethereum and Solana. Galaxy was also approved as one of three validators for BlackRock's iShares Staked Ethereum Trust ETF (ETHB). The staking service remains subject to regulatory review, according to BNY's August 4 announcement.
State Street — $46.6 Trillion AUC. The world's second-largest custodian selected Taurus, a Swiss digital-asset infrastructure provider, as its technology partner. State Street is building custody, transfer agency services for tokenized assets, and plans to support tokenized Treasuries as collateral. The bank requires Federal Reserve approval for its crypto custody business. Bloomberg reported State Street's digital-asset platform rollout on January 15, 2026.
Citi. Citigroup plans to launch institutional Bitcoin custody, integrating cryptocurrency into the same custody, reporting, and tax frameworks used for traditional assets. The bank aims to let clients manage Bitcoin alongside securities and cash under a single safekeeping account, enabling cross-margining between digital and traditional assets, according to CNBC reporting from October 2025 and CoinDesk's February 2026 update.
Anchorage Digital. The first OCC-chartered crypto bank (January 2021) integrated Lido staking into its institutional platform in July 2026, allowing clients to access wrapped staked Ether (wstETH) while assets remain under regulated custody. Anchorage also serves as the custodian for SharpLink's $200 million ETH staking deployment via Lido.
Ethereum's staking participation has reached approximately 41.4 million ETH, or 34% of total supply, distributed across 897,000 active validators. Base staking rewards have compressed to 2.78% APR, with MEV and execution-layer tips adding 0.5–1%, bringing well-run validators to 3–3.8% APR, according to CoinLaw's August 2026 staking statistics.
For custody banks, staking represents a revenue multiplier on existing relationships. A bank already earning 1–3 basis points on custody can layer staking fees — typically 5–15% of staking rewards — on top of that base. At current Ethereum yields, a 10% fee on 3% staking rewards produces an additional 30 basis points of revenue per dollar of staked ETH — an order-of-magnitude increase over custody-only fees.
The total value staked across proof-of-stake networks exceeds $245 billion against a circulating PoS market capitalization of $711 billion, yielding a global staking ratio of 34.4%, according to Everstake's 2026 market analysis. The staking-as-a-service market is projected to grow from $5.97 billion in 2026 to $28.4 billion by 2034, per Intel Market Research.
The SEC and CFTC's joint interpretive release on March 17, 2026, classified staking rewards as non-securities. This resolved the legal ambiguity that had delayed Ethereum staking ETFs. Two U.S. Ethereum staking ETFs are now live: Grayscale's ETHE (since October 2025) and BlackRock's ETHB (since March 2026). On August 11, 2026, Fidelity filed with the SEC to add staking to the Fidelity Ethereum Fund (FETH), which holds approximately $898 million in assets.
The custody-staking convergence extends beyond fund managers. SharpLink, a Nasdaq-listed company, announced on August 13, 2026, that it will stake $200 million of ETH through Lido's wstETH, representing approximately 106,000 ETH or 12% of the 889,000 ETH it held as of early August. Anchorage Digital serves as custodian. Separately, on August 7, SharpLink and Galaxy Digital launched a $125 million on-chain yield fund — the first institutional vehicle of its kind backed by a Nasdaq-listed corporate treasury and managed by a major crypto financial services firm, according to GlobeNewsWire.
This two-track model — liquid staking for base yield plus active DeFi yield through a managed fund — represents the emerging corporate treasury playbook. The institutional custody infrastructure being built by BNY, State Street, and Citi is designed to service exactly this type of client: corporations that want on-chain yield but require the same custody, reporting, and compliance frameworks they use for bonds and equities.
Coinbase remains the dominant institutional custodian, with $376 billion in assets on platform at year-end 2025, representing more than 12% of global crypto market capitalization, according to Forbes' April 2026 reporting on Coinbase's OCC approval. Coinbase custodies over 80% of U.S. Bitcoin and Ethereum ETF assets and secures approximately 11% of all staked Ether.
The competitive threat from custody banks is structural. Traditional banks offer services crypto-native firms cannot: FDIC-insured deposit accounts, cross-margining with traditional securities, unified tax reporting across asset classes, and existing relationships with the world's largest asset managers. However, crypto-native custodians hold advantages in DeFi integration, multi-chain support, and speed of protocol adoption.
Anchorage Digital has responded by deepening its protocol integrations. In March 2026, it added Tron custody. In July, it integrated Lido staking. It became the first qualified custodian for Starknet's STRK token. These moves reflect a strategy of competing on breadth and speed of crypto-native capability, rather than matching banks on traditional financial infrastructure.
The OCC's December 2025 charter grants created a middle tier: crypto firms with federal banking licenses. Fidelity Digital Assets, BitGo, Coinbase, Crypto.com, and Paxos now hold national trust charters, allowing them to offer custody under OCC supervision. This narrows the regulatory gap between banks and crypto-native custodians, though trust charters do not permit deposit-taking or lending.
Several regulatory processes remain in play. BNY's staking service requires regulatory approval before launch. State Street needs Federal Reserve sign-off. The SEC's Division of Investment Management has listed custody modernization for digital assets as an active rulemaking priority on its 2025–2026 regulatory agenda.
The GENIUS Act, which passed and is being implemented in 2026, provides a federal framework for stablecoin issuance but also clarifies bank authority to engage in digital-asset activities. The OCC has determined that staking cryptocurrency is a permissible activity for national banks, but the practical application of that determination to custody banks with tens of trillions in AUC remains untested at scale.
Fidelity Digital Assets' conversion from a state trust company to a national trust bank — conditionally approved in December 2025 — has not yet received final approval as of August 2026. The pace of regulatory processing will determine how quickly the institutional custody-staking market can absorb the capital waiting on the sidelines.
The entry of custody banks into staking raises concentration concerns. If BNY routes client staking through Galaxy Digital's validators, and BlackRock's ETHB already uses Galaxy as one of three validators, a significant share of institutionally staked ETH could flow through a small number of validator operators.
Coinbase already secures approximately 11% of staked Ether. Galaxy reported $3.2 billion in staked assets across its validator infrastructure. As custody banks funnel corporate and institutional capital into staking, the validator set could become more concentrated even as total staked capital increases. This dynamic — more capital, fewer decision-makers — runs counter to the decentralization thesis underlying proof-of-stake consensus design.
Ethereum's staking rate of 34% already distributes rewards across 897,000 validators, compressing yields. Additional institutional capital accelerates that compression. The question is whether the marginal yield — already below 3% on a base-reward basis — justifies the operational complexity and regulatory overhead for custody banks entering the market.
The institutional custody-staking market is consolidating around a two-tier structure: traditional banks offering bundled custody-staking-reporting services, and OCC-chartered crypto firms competing on protocol depth and speed. The economic incentives are clear — staking adds 30 basis points of revenue per dollar of staked ETH to custody-only relationships. The regulatory path is largely open following SAB 122, the OCC charter grants, and the SEC/CFTC staking classification.
What remains uncertain is timing and scale. BNY's staking service still requires regulatory approval. State Street needs the Federal Reserve. Citi is targeting "the next few quarters." The gap between announcement and live service could be months. During that interval, crypto-native custodians — particularly Coinbase and Anchorage — continue to deepen their protocol integrations and institutional relationships.
The $245 billion staked across proof-of-stake networks represents a yield-bearing asset class that did not exist at institutional scale three years ago. The entry of custody banks with $109 trillion in combined AUC signals that staking is transitioning from a crypto-native activity to a standard component of institutional asset servicing. The economic value at stake — for validators, custody banks, and the networks themselves — will be determined by how quickly regulatory approvals convert announcements into operational platforms.