State Street and Digitalization of Finance: Plans to Launch Stablecoin and Tokenized Deposits

State Street Corp., one of the largest players in traditional finance (TradFi), is actively considering launching its own stablecoin and tokenized deposits. This initiative aims to expand the company's payment settlement capabilities using blockchain technology. A message about this appeared on July 17, when Bloomberg News, citing sources close to the situation, shared this information.

One of the key components of State Street's strategy is to leverage its investment in UK payments startup Fnality. This company specializes in developing blockchain-based payment solutions and is looking to expand its operations in the United States. Joining the digital money consortium is also seen as an important step in its digital expansion strategy.

This is not State Street's first step into the cryptocurrency space. The company already acts as a fund manager for spot Bitcoin ETFs launched earlier this year. As part of its digital expansion, State Street has integrated its digital assets team into its core business operations, allowing it to more closely link traditional finance and digital assets.

State Street provides fund administration and accounting services for spot Bitcoin ETFs. In collaboration with Galaxy Asset Management, the company is developing digital asset ETFs, responding to the growing demand for such products. In the coming months, State Street plans to focus on tokenizing various assets, such as funds.

A recent State Street survey of 300 investment institutions found that nearly half of respondents were willing to trade digital assets on distributed ledgers and blockchains. This highlights the need to develop appropriate infrastructure to support such trading operations.

State Street's interest in blockchain technology and digital assets is part of a broader trend in the financial sector. For example, JPMorgan Chase & Co. launched its Onyx blockchain and JPM Coin stablecoin in 2020. In 2023, the bank introduced the Tokenized Collateral Network to improve programmable payments.

Goldman Sachs also began trading digitized bonds on the blockchain in 2021, demonstrating growing confidence in digital assets in traditional finance. PayPal launched its stablecoin PYUSD in August 2023, and BlackRock tokenized assets with a digital liquidity fund.

Deposit tokens, which are digital versions of bank deposits, are becoming increasingly popular. Project Guardian, launched by the Monetary Authority of Singapore in 2022, included JPMorgan as a key participant, highlighting interest in the technology internationally.

State Street and other major financial institutions are actively exploring and adopting blockchain technologies and digital assets, recognizing their potential to modernize and streamline financial processes. These moves highlight the growing acceptance of digital assets in traditional finance and foreshadow further developments in this dynamic area.