Markets
State Street mulls creation of stablecoins and deposit tokens as RWA tokenization intensifies
State Street, a Boston-based banking and wealth management giant, is exploring the creation of stablecoins and tokenized deposits to settle transfers on blockchain tracks, Bloomberg reported Wednesday, citing a source familiar with the matter.
The bank is also considering participating in “digital money consortium efforts” and is “examining transaction options” through Fnality International, a fintech company in which State Street has invested according to the report.
The report comes as State Street is increasing its presence in the digital assets space. State Street Global Advisors, the firm’s investment management arm, has also signed a deal with cryptocurrency investment firm Galaxy (GLXY) to develop cryptocurrency trading products, CoinDesk reported at the end of June based on regulatory declarations. The information reported early last month that State Street was rebuilding its digital assets division just six months after cutting the team, with plans to offer cryptocurrency custody services.
Traditional finance heavyweights are increasingly involved in the tokenization of traditional financial assets, orreal world goods (RWA) by placing bonds, funds or credits on blockchain tracks. They do this to earn Operational benefits such as greater efficiency, faster and more timely transactions and lower administrative costs. Stablecoins are blockchain-based cryptocurrencies with a price pegged to an external asset. Most stablecoins are pegged to the US dollar and are widely used as a tokenized version of cash.
Asset management giant BlackRock, which now offers the largest bitcoin spot (BTC) exchange-traded fund, introduced its first tokenized money market fund on Ethereum (ETH) network with different decentralized finance (DeFi) that build on it. Global bank JPMorgan has developed its private blockchain Onyx with its JPM Coin, a private digital version of the U.S. dollar.