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BNY (NYSE: $BNY), the world's largest custodian bank, is partnering with crypto financial services firm Galaxy Digital (NASDAQ: $GLXY) to add staking capabilities to its digital asset custody platform.

Under the collaboration, eligible institutional clients will be able to stake digital assets held through BNY's custody platform, allowing them to earn rewards while contributing to the operation and security of proof-of-stake (PoS) blockchain networks. The service remains subject to regulatory review, according to a Tuesday announcement.

Galaxy will provide the staking infrastructure and serve as a design partner. The collaboration is intended to allow institutions to access staking without moving assets to a separate provider.

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"As digital assets continue to evolve, clients want more than safekeeping alone — they want a broader set of capabilities delivered through an institutional-grade model," Carolyn Weinberg, BNY's chief product and innovation officer, said, adding that the partnership would help expand the bank's digital asset capabilities.

BNY has been expanding its blockchain operations since launching digital asset custody services in 2022.

Last week, the bank announced that it is moving its transfer agency record-keeping onto blockchain to create a single onchain ownership ledger and reduce reliance on intermediaries. The bank plans to use the system for tokenized funds, including a U.K.-regulated fund from Baillie Gifford, while BlackRock and others are also expected to adopt the infrastructure.

BNY is also expanding its stablecoin services by making Circle's USDC (CRYPTO: $USDC) the first stablecoin supported on its Digital Asset Custody platform, allowing institutional clients to custody USDC and convert it to or from U.S. dollars through Circle (NYSE: $CRCL).

BNY (NYSE: BNY) is currently trading at $156.20 per share, while Galaxy Digital (NASDAQ: GLXY) is trading at $21.88 per share