TradFi giant State Street Corp. is considering launching its own stablecoin and tokenized deposits in an effort to improve its payment settlement capabilities using blockchain technology, Bloomberg News reported on July 17, citing sources familiar with the matter.
Sources told the newswire that these initiatives aim to leverage the company’s investment in British payments startup Fnality and join broader “digital-cash consortium efforts.”
The potential move would mark a substantial step forward for State Street, which has been gradually integrating into the crypto space, mainly by serving as a fund manager for the spot Bitcoin ETFs launched earlier this year.
Digital expansion
State Street is also evaluating participation in a digital money consortium effort and exploring settlement options through its investment in Fnality, which is looking to expand into the US. Fnality, which focuses on blockchain-based payment solutions, is seen as a key player in State Street’s strategy to streamline global payment processes.
The report added that State Street has ramped up its efforts in digital assets. Earlier this year, the company integrated its digital assets team into its overall business operations, aiming for closer integration between traditional financial and digital assets.
The company also provides fund administration and accounting services for spot Bitcoin ETFs and has expanded its digital asset initiatives through a partnership with Galaxy Asset Management to develop digital asset ETFs against rising demand.
In the coming months, State Street plans to focus on tokenizing assets such as funds. A recently published digital asset survey of 300 investment firms by the firm found that nearly half of respondents are willing to trade digital assets on and off distributed ledgers and blockchains, provided they have the right infrastructure in place.
The growing interest of TradFi
The company’s interest in blockchain is part of a broader trend among financial institutions to modernize and streamline settlement processes through digital assets.
JPMorgan Chase & Co. has been a leader in blockchain technology for several years and launched its Onyx blockchain and stablecoin, JPM Coin, in 2020. The bank further expanded its blockchain initiatives with the Tokenized Collateral Network in 2023, enhancing programmable payments. .
Similarly, Goldman Sachs began trading digitized bonds on blockchain in 2021, indicating growing trust in digital assets within traditional finance.
The trend is not limited to banks: PayPal launched its PYUSD stablecoin in August 2023, while BlackRock ventured into asset tokenization with a digital liquidity fund in March after launching the most successful spot Bitcoin ETF.
Deposit tokens, digital representations of bank deposits, have also gained popularity among traditional financial companies. The Monetary Authority of Singapore’s Project Guardian, launched in 2022, saw JPMorgan as a key participant, further developing the technology for its own applications.
These developments highlight broader adoption of digital assets in the mainstream financial sector.