Custody giant State Street, which oversees about $52 trillion in assets under custody and administration, has launched a Digital Assets Platform as banks respond to surging customer demand for tokenized products.
State Street’s apparent endorsement of tokenization is significant as it is symbolic, demonstrating banking heavyweights now take seriously that the future of financial markets is on-chain.
The platform, rolled out in January, includes wallet management, custodial, and cash capabilities that support tokenized product development in different jurisdictions. This includes private and public permissioned blockchain networks.
The move underscores the Boston-based bank’s ambitions to develop a suite of institutional-grade digital products, including tokenized money market funds (MMFs), exchange-traded funds (ETFs), tokenized assets, and cash products, such as tokenized deposits and stablecoins, according to bank officials. As an example, tokenizing MMFs and ETFs could open markets for fractional ownership.
“By pairing blockchain connectivity with robust controls and global servicing expertise, we’re enabling institutions to confidently embrace tokenization as part of their core strategy,” Joerg Ambrosius, president of State Street Investment Services, said in a prepared statement.
State Street already serves crypto markets, providing administration and accounting support for crypto ETFs.
The latest initiative is the bank’s answer to the growing institutional appetite seeking exposure to digital assets. In December, State Street Investment Management announced it was partnering with Galaxy Digital to launch a tokenized private liquidity fund, with around $200 million in seed funding from Ondo Finance.
In addition to making Wall Street more efficient, the increasing use of tokenization is firmly intertwined with the democratization of access to previously inaccessible capital and investment, says Jesse Knutson, head of operations at Bitfinex.
“Through fractional ownership, built-in compliance, and greater efficiency, tokenization should mean that individuals and businesses, particularly in emerging markets, have greater wealth generation and funding opportunities,” he adds.
With the promise of nothing short of a revolution in financial markets, it is perhaps no surprise that other global banks, including JPMorgan Chase, Citi, HSBC, and UBS, are already active in the market for tokenized digital assets.
