State Street expands tokenization push as banks rush to bring cash and funds onchain: Bloomberg

State Street, one of the world’s largest custodian banks and asset managers, is significantly accelerating its strategic commitment to asset tokenization, according to recent reports. This move highlights the broader institutional drive among major financial players to integrate distributed ledger technology (DLT) into core operational functions. The expansion focuses specifically on bringing traditional financial instruments, namely institutional funds and the associated cash required for settlement, onto blockchain platforms.

This aggressive push comes amid an industry-wide recognition that tokenization promises to revolutionize efficiency, dramatically reduce settlement times, and unlock new liquidity pools for real-world assets (RWAs). For State Street, expanding its tokenization infrastructure means developing robust systems that can handle the entire lifecycle of a tokenized fund—from issuance and transfer agency services to custody and post-trade settlement.

A critical element of this shift is the need to tokenize cash. Traditional assets cannot settle efficiently on a blockchain without a corresponding digital representation of money. State Street is therefore focused on creating digital cash solutions necessary to enable instantaneous delivery versus payment (DvP) natively within the DLT environment, removing reliance on legacy, fragmented fiat payment rails. This institutional race, which includes heavyweights like JPMorgan and BNY Mellon, signifies that major banks view the tokenization of cash and funds not as a niche experiment, but as the foundational architecture for the future of global capital markets.

Source: State Street expands tokenization push as banks rush to bring cash and funds onchain: Bloomberg