A collaboration between Lido, an expert in Ethereum staking, and Taurus, a Swiss cryptocurrency custody company, brought banks one step closer to enabling their clients to profit from keeping and staked Ethereum tokens.Lido’s liquid staking product is currently only accessible to Swiss-based, FINMA-regulated banks partnered with Taurus, which also works with Deutsche Bank and Santander. With this product, businesses lock up their ether (ETH) on the blockchain and receive a digital record of that in the form of another token (stETH) that can be used for trading elsewhere.
“The goal is to build a bridge between the world of digital assets with the world of traditional finance,” said Taurus CMO Victor Busson in an interview. “So Taurus is enabling institutions such as banks to access liquid staking solutions, with Lido being the leader in that space. We are seeing more and more demand from our banking clients to offer these kinds of staking services.”
Although there has been discussion of major financial institutions participating in Ethereum staking, there is little confirmation of this actually occurring, in part due to regulatory uncertainties surrounding the receipt of rewards from proof-of-stake blockchains.
According to Vassili Lavrov, head of product at Taurus, it is anticipated that European jurisdictions would generally follow suit when it comes to exotic financial products like liquid staking, as the Swiss financial authority FINMA released guidelines on staking cryptocurrency last year.
“One open question that was clarified from a banking law perspective was that when funds are locked up, those funds must be available to clients at any given time,” Lavrov said in an interview. “You could argue that is achieved by liquid staking, since funds are readily available and the token can be exchanged one-to-one with ETH. So I see a breakthrough opportunity for banks to get into solutions like Lido.”
Last year, Deutsche Bank made an investment in the custody company in addition to partnering with Taurus. This was a part of a $65 million Series B transaction managed by Credit Suisse, which also included Arab Bank Switzerland and Pictet Group.It’s also said that Taurus collaborates with Santander.According to Marin Tvrdić, master of protocol relations at Lido, while the Lido protocol issues liquid staking stETH tokens for ether inputs, it never takes control of cash, which can pose some challenges for the uninitiated.
“It’s quite a steep learning curve,” Tvrdić said in an interview. “So you’re essentially putting your funds at risk if you’re not familiar with how the technology operates, how the blockchain operates, and how to protect your funds. So this collaboration with Taurus is very important to enable accessibility on banking-grade software.”