State Street Is Exploring a Stablecoin and Tokenized Deposits Launch: Report

State Street Corp., a major Boston-based firm in traditional finance, is exploring launching its own stablecoin and tokenized deposits to improve payment settlement using blockchain technology.

According to Bloomberg a report On Wednesday, the bank made active efforts to integrate into the cryptocurrency space.

State Street Seeks Digital Expansion

In addition to its ongoing stablecoin efforts, State Street wants to participate in the development of a digital cash consortium and explore settlement options through Fnality International, a fintech firm in which it has invested.

Fnality focuses on blockchain-based payment solutions, which are at the core of State Street’s strategy to simplify global payments. The company has intensified its efforts in the digital assets space, integrating its dedicated team into the overall business operations. This will align with traditional finance and digital assets.

State Street is making moves into the blockchain space. It currently provides fund management and accounting services for Bitcoin exchange-traded funds (ETFs) and has partnered with Galaxy Asset Management to develop digital asset ETFs.

Meanwhile, reports early last month said State Street was rebuilding its digital assets division just six months after laying off the team, with plans to offer crypto custody services.

The company also recently conducted a survey of 300 institutional investors, which revealed that nearly half of them are willing to trade digital assets on and off distributed ledgers, given the right infrastructure.

Major banks and institutions are adopting cryptocurrencies

In traditional finance, major players are increasingly turning to tokenizing real assets, such as bonds and funds, using blockchain technology. This has added benefits, such as increased efficiency, faster settlements, and reduced administrative costs.

Meanwhile, stablecoins are attractive because they are pegged to the value of a stable asset, often the US dollar, and provide a digital representation of fiat currency on the blockchain.

JPMorgan Chase & Co. has been at the forefront of blockchain adoption. The company launched the Onyx blockchain and JPM Coin in 2020 and expanded with the Tokenized Collateral Network in 2023.

On the other hand, Goldman Sachs started trading digital bonds on the blockchain in 2021, while PayPal launched the PYUSD stablecoin in August 2023.

In March, BlackRock ventured into tokenization with a digital liquidity fund, just months after launching a successful Bitcoin spot exchange-traded fund. These developments paint a picture of the growing acceptance of digital assets in mainstream finance, as institutions seek to adapt to the market through blockchain technology.