Galaxy announced Tuesday that it has entered into a partnership with BNY (NYSE: BKY) to expand digital asset services for institutional clients, with staking as the first offering under the collaboration.

Staking allows holders of certain proof-of-stake digital assets to earn rewards by participating in network validation. It has grown into a core feature of the digital asset ecosystem, particularly following Ethereum's transition to a proof-of-stake consensus model in 2022. Under the new agreement, staking functionality will be integrated into BNY's Digital Asset Custody platform, enabling clients to store their assets and earn staking rewards within a single system. Galaxy is also assisting BNY in developing additional components of its broader digital asset platform, serving as an infrastructure partner behind the scenes.

The staking feature remains subject to regulatory approval before it can be launched to clients. Staking programs have drawn enforcement attention from U.S. regulators, including a 2023 SEC settlement with a major crypto exchange over its staking-as-a-service offering, underscoring why institutional clients may value a bank-mediated approach operating within established compliance frameworks.

Carolyn Weinberg, a product executive at BNY, said that clients are looking for more than secure storage for their digital assets — they also want practical, value-added features. She noted that Galaxy is itself a user of BNY's custody platform, which made the partnership a natural extension of the existing relationship between the two firms. For institutional holders of proof-of-stake assets, staking offers a way to generate yield on holdings that would otherwise remain static in custody.

Steve Kurz of Galaxy described the deal as part of a broader trend in financial services, where an increasing range of functions is migrating onto digital infrastructure. Kurz said that Galaxy has spent years developing the technology required to deliver staking at scale, and that this collaboration allows the firm to bring that expertise to an institution that already holds the trust of large-scale clients. A number of major custody banks and asset managers have been progressively expanding their digital asset capabilities, with custody and fund administration among the first services to gain traction and yield-generating features representing a logical next step.

Once regulatory clearance is obtained, BNY clients will be able to access staking alongside the bank's existing digital asset services, which include custody, accounting, tax reporting, and payments. All of these functions will operate through BNY's established systems, allowing clients to adopt new capabilities without moving away from the safety, compliance, and operational support they already rely on.

BNY, founded in 1784 and headquartered in New York, is one of the oldest banks in the United States and operates the world's largest custody bank by assets under custody. Galaxy, founded by Michael Novogratz, is a digital asset and blockchain-focused financial services firm based in New York.