TradFi giant State Street Corp. is exploring the possibility of launching its stablecoin and tokenized deposits to improve payment settlement capabilities using blockchain technology. This potential move comes as State Street aims to leverage its investment in UK-based payment startup Fnality and participate in broader digital-cash consortium efforts.
State Street has been gradually entering the crypto space by serving as the fund manager for spot Bitcoin ETFs and is now looking to expand its digital initiatives. The company’s investment in Fnality, which focuses on blockchain-based payment solutions, plays a crucial role in its strategy to streamline global payment processes.
In addition to evaluating digital-cash consortium efforts, State Street plans to focus on tokenizing assets like funds in the coming months. A recent digital-asset survey conducted by the company revealed that nearly half of the 300 investment institutions surveyed are ready to trade digital assets on and off distributed ledgers and blockchains with the right infrastructure in place.
State Street’s interest in blockchain technology reflects a broader trend among financial institutions to modernize settlement processes using digital assets. For example, JPMorgan Chase & Co. launched its Onyx blockchain and stablecoin, JPM Coin, in 2020, and further expanded its blockchain initiatives with the Tokenized Collateral Network in 2023 to enhance programmable payments.
Similarly, Goldman Sachs began trading digitized bonds on the blockchain in 2021, signaling increased confidence in digital assets within traditional finance. PayPal also joined the trend by launching its PYUSD stablecoin in August 2023, while BlackRock entered asset tokenization with a digital liquidity fund in March after launching a successful spot Bitcoin ETF.
Furthermore, deposit tokens, which are digital representations of bank deposits, have gained popularity among traditional financial firms. JPMorgan’s participation in the Monetary Authority of Singapore’s Project Guardian in 2022 demonstrates the ongoing development of technology for various applications in the financial sector.
These developments highlight the growing acceptance of digital assets in mainstream finance as companies like State Street, JPMorgan, and others continue to explore blockchain technology and digital payment solutions to enhance their operations and services.
