State Street Corp., a major player in the financial services and banking industry, is delving into blockchain technology to streamline payment settlements, according to sources familiar with the matter. The Boston-based asset manager, which recently reported higher-than-expected revenue and interest income, is considering launching its own stablecoin and deposit token to enhance its digital asset offerings.
A stablecoin is a type of cryptocurrency that operates on a blockchain and is typically pegged to a stable asset, such as the US dollar. State Street’s exploration into creating a stablecoin and a deposit token—representing customer deposits on a blockchain—signals the firm’s commitment to integrating blockchain technology into its financial operations. The information, revealed by an anonymous source, indicates that State Street is keen on leveraging blockchain to improve payment efficiency. However, a State Street spokesperson declined to comment on these developments.
In addition to its own blockchain initiatives, State Street is assessing its potential involvement in digital-cash consortiums and exploring settlement options through its investment in Fnality, a blockchain payment startup expanding into the US market. These moves align with the broader financial industry’s push towards adopting blockchain technology for faster and more cost-effective transactions.
The crypto industry has long advocated for the advantages of blockchain—a digital ledger that can revolutionize global payment systems. Traditional financial companies are increasingly adopting blockchain solutions for payment settlements. For instance, PayPal introduced its own stablecoin last year, and major card networks like Visa and Mastercard already support stablecoin-based transactions. Moreover, JPMorgan Chase & Co., the largest bank in the US, is exploring the use of deposit tokens.
State Street’s potential introduction of a deposit token would require approval from US banking regulators. This regulatory step is crucial to ensure the stability and compliance of new financial instruments within the existing legal framework.
The firm’s interest in digital assets is not new. Earlier this year, State Street integrated its digital-asset-focused team into its main business operations, aiming for a seamless blend between traditional finance and digital assets. As the third-largest exchange-traded fund (ETF) manager, State Street already offers fund administration and accounting services for crypto ETFs. It has also expanded its digital asset initiatives through a partnership with Galaxy Asset Management to develop digital asset ETFs.
Looking ahead, State Street plans to focus on tokenizing various assets, including funds. According to a recently released digital-asset survey conducted by State Street, nearly half of the 300 investment institutions surveyed are prepared to trade digital assets on and off distributed ledgers and blockchains, provided they have the necessary infrastructure in place.
State Street’s exploration into stablecoins and blockchain payment solutions represents a significant step towards the future of finance. By integrating cutting-edge technology into its operations, the firm is positioning itself at the forefront of the digital asset revolution, aiming to offer faster, more secure, and cost-effective financial services to its clients.
