TradFi Giant State Street Mulls Creating Stablecoin, Tokenized Deposits: Bloomberg

Traditional financial heavyweights are getting increasingly involved in tokenization efforts, putting financial assets on blockchain rails for operational benefits.

Boston-based asset management and banking giant State Street is exploring creating stablecoins and tokenized deposits to settle transfers on blockchain rails, Bloomberg reported Wednesday, citing a source familiar with the matter.

The bank is also considering participating in "digital-cash consortium efforts" and is "looking at settlement options" via Fnality International, a fintech firm in which State Street has invested, the report said.

The report comes as State Street is ramping up its presence in the digital asset space. State Street Global Advisors, the investment management arm of the company, is also setting up a venture to develop crypto trading products with crypto investment firm Galaxy (GLXY), CoinDesk reported in late June, citing regulatory filings. State Street is also rebuilding its digital asset division six months after cutting the team, with plans for offering crypto custody services, the Information reported early last month.

TradFi heavyweights are getting increasingly involved in the tokenization of traditional financial assets, or real-world assets (RWA) by placing bonds, funds or credit on blockchain rails. They do so to gain operational benefits such as increased efficiency, faster and around-the-clock settlements and lower administrative costs. Stablecoins are blockchain-based cryptocurrencies with a pegged price to an external asset. Most stablecoins are pegged to the U.S. dollar and are widely used as a tokenized version of cash.

Asset management giant BlackRock, which now offers the largest spot bitcoin (BTC) exchange-traded fund, introduced its first tokenized money market fund on the Ethereum (ETH) network with several decentralized finance (DeFi) protocols building on it. Global bank JPMorgan developed its private blockchain Onyx with its JPM Coin, a private digital version of the U.S. dollar.

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