State Street Bank officially enters the encryption field, preparing to make a blockchain leap through stablecoins and deposit tokens

State Street, a global asset manager, is reportedly showing significant interest in blockchain settlement technology and is considering making substantial advancements in this area.

Stablecoin and Deposit Tokens

According to a Bloomberg source, State Street is contemplating creating its own stablecoin and deposit token. This move would leverage its investment in the UK-based payment startup Fnality to develop new settlement options and participate in digital-cash consortium efforts.

Industry Precedents

State Street is not the first to explore blockchain settlement. Major financial institutions have already made strides in this domain:

• JPMorgan launched its Onyx blockchain and stablecoin, the JPM Coin, in 2020 and began trading digitized bonds the following year. In 2023, it introduced the Tokenized Collateral Network with a programmable payments feature.
• Goldman Sachs began trading digitized bonds on the blockchain in 2021.
• Project Guardian by the Monetary Authority of Singapore, initiated in 2022, pioneered deposit tokens. JPMorgan was a founding member and has since developed the technology for its use.
• PayPal introduced its PayPal USD (PYUSD) stablecoin in August 2023.
• BlackRock began asset tokenization with a digital liquidity fund in March 2023.

State Street's Previous Involvement in Digital Finance

State Street created a dedicated digital finance division in 2021, which later faced layoffs but was revived and integrated into the main business in 2023.

The company participated in a securities transaction settlement trial with the Depository Trust and Clearing Corporation (DTCC) and other financial institutions in 2022.

State Street Bullish on Crypto ETFs

State Street has a strong presence in the crypto ETF market, serving as the fund administrator for several Bitcoin exchange-traded funds (ETFs).

Galaxy Digital is one of the ETF providers of its services, and the two firms have agreed to collaborate on creating new digital asset ETFs.

State Street has applied to the US Securities and Exchange Commission (SEC) to add the SPDR Galaxy Emerging Technology Enablers ETF, SPDR Galaxy Digital Asset Ecosystem ETF, and Hedged Digital Asset Ecosystem ETF to its extensive lineup of funds.