TL;DR
- Street is considering creating stablecoins and tokenized deposits to facilitate blockchain-based payments.
- Digital Asset Expansion: The company is partnering with Galaxy to develop crypto trading products and plans to offer crypto custody services.
- Industry Trend: This move aligns with a broader trend of traditional finance firms adopting blockchain technology for improved efficiency and reduced costs.
State Street, a major asset management and banking company based in Boston, is currently looking into the possibility of creating stablecoins and tokenized deposits to facilitate transfers on blockchain platforms. This decision, as reported by Bloomberg, showcases the firm’s rising fascination with digital assets and blockchain technology.
According to sources familiar with the matter, State Street is considering participating in “digital-cash consortium efforts” and is evaluating settlement options via Fnality International, a fintech firm in which it has invested. This initiative is part of State Street’s broader strategy to enhance its presence in the digital asset space.
Expanding Digital Asset Services
State Street Global Advisors, the investment management arm of the company, recently inked a deal with crypto investment firm Galaxy to develop crypto trading products.
This partnership is a significant step in State Street’s efforts to rebuild its digital asset division, which was restructured just six months ago. The company plans to offer crypto custody services as part of this expansion.
Traditional Finance Embraces Blockchain
Big players in the traditional finance industry are increasingly jumping on the bandwagon of tokenizing real-world assets (RWA). Through utilizing blockchain technology to digitize bonds, funds, and credit, these institutions are striving for improved efficiency, quicker settlements, and reduced administrative expenses.
Stablecoins, for example, blockchain-based cryptocurrencies linked to external assets like the U.S. dollar, are often employed as a digitalized version of currency.
Industry-Wide Adoption
State Street’s decision is in line with a wider trend in the industry. BlackRock, a major player in asset management, has launched its initial tokenized money market fund on the Ethereum network, in addition to offering the largest spot bitcoin exchange-traded fund.
Similarly, global bank JPMorgan developed its private blockchain, Onyx, featuring JPM Coin, a private digital version of the U.S. dollar. State Street’s exploration of stablecoins and tokenized deposits underscores the growing interest among traditional financial institutions in leveraging blockchain technology to enhance their services and operational efficiency.
