Read

American financial giant State Street is exploring blockchain technology to tokenize bonds and money market funds for enhanced collateral management.
State Street, the largest custodian bank in the world, is leveraging <a href="https://crypto.news/tag/blockchain/" target="_blank" rel="noopener noreferrer nofollow">blockchain</a> to explore the tokenization of bonds and money market funds, joining a growing number of firms adopting distributed ledger technology in traditional finance.
In an Oct. 8 <a href="https://www.fnlondon.com/articles/state-street-mulls-tokenised-bond-push-267366d5" target="_blank" rel="noopener noreferrer nofollow">interview</a> with Financial News, State Street chief product officer Donna Milrod said the firm has two ongoing projects focused on tokenizing collateral linked to money market funds and bonds, adding that the pilot “will take us through part of next year.”
She explained that the Boston-headquartered banking institution aims to develop tokenized collateral that can be used as variation or initial margin for trading.
<h2 class="wp-block-heading" id="state-street-does-not-rule-out-stablecoin-launch">State Street does not rule out stablecoin launch</h2>
Currently, trading firms are required to liquidate their holdings in money market funds to post cash as margin for trades. However, with digitalized funds, tokens could serve as collateral, eliminating the need for redemption altogether, Milrod explained.
State Street is not the first institution experimenting with the tokenization of money market funds. BlackRock, for example, <a rel="noopener noreferrer nofollow" href="https://crypto.news/blackrocks-buidl-adds-over-5m-in-a-week-despite-market-turbulence/">launched</a> a blockchain-based fund earlier in March. JPMorgan is <a rel="noopener noreferrer nofollow" href="https://crypto.news/jpmorgans-digital-token-jpm-coin-eyes-10b-daily-transactions/">also exploring</a> the use of tokenized money market funds as collateral and has already tokenized real-world money through its stablecoin.
Although Milrod noted State Street’s current focus does not include <a href="https://crypto.news/state-street-exploring-creating-a-stablecoin/" target="_blank" rel="noopener noreferrer nofollow">launching a stablecoin</a>, she acknowledged the potential for future developments, saying, “That does not mean we will not [launch a stablecoin] at some point, but we do not feel the need to do that right now.”
Read more: <a rel="noopener noreferrer nofollow" href="https://crypto.news/swift-to-trial-tokenized-asset-transactions-in-2025/"> SWIFT to trial tokenized asset transactions in 2025 </a>

Report: State Street enters tokenized bonds and digital money funds

Table of Contents

crypto.news

Other articles published on Oct 8, 2024

Weekly Article Recap: 9/16-9/20

Scroll L2 protocol announces native SCR token

Ripple Advances Stablecoin Testing with RLUSD Minting and Burning

Will Worldcoin Price Explode 400% If Microsoft Buys OpenAI?

My wife and I got back together through cryptocurrency cloud mining

Floki's Valhalla Partners with Esports Giant Alliance

Join our free newsletter for daily crypto updates!