As a seasoned researcher with years of experience in the financial sector, I find the recent moves by State Street to tokenize bonds and money market funds using blockchain technology both intriguing and promising. Having witnessed the rapid evolution of digital ledger technology in traditional finance, it’s clear that institutions like State Street are recognizing the potential benefits of this transformative technology.
State Street, a significant American financial institution, is investigating the use of blockchain technology to convert bonds and money market funds into digital tokens, aiming to improve their handling and secure collateral management.
On a global scale, State Street Bank – the biggest custodian bank – is employing blockchain technology to investigate the digitization of bonds and money market funds, thereby joining an expanding roster of businesses delving into the use of distributed ledger technology within conventional finance.
During a conversation with Financial News on October 8th, State Street’s Chief Product Officer, Donna Milrod, mentioned that the company is currently working on two active projects aimed at tokenizing collateral tied to money market funds and bonds. She also stated that the pilot for these projects is expected to continue through part of the next year.
The Boston-based banking organization intends to create digital tokens that can serve as a substitute or starting security for transactions in trading.
State Street does not rule out stablecoin launch
At present, financial institutions must sell off their investments in money market funds to provide cash as security for transactions. But with digitized funds, these tokens can act as collateral, thus doing away with the requirement of redeeming funds entirely, as Milrod outlined.
It’s not just State Street that’s venturing into the tokenization of money market funds; institutions like BlackRock have been pioneers in this area. For instance, BlackRock introduced a blockchain-based fund back in March. Moreover, JPMorgan is also delving into the application of tokenized money market funds as collateral and has even tokenized real-world currency through its stablecoin.
Although Milrod noted State Street’s current focus does not include launching a stablecoin, 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
Sorry. No data so far.
2024-10-08 17:00