State Street, a Boston-based custody bank, monitors $49 trillion in assets, but is pushed deep into digital assets by joining JPMorgan’s blockchain-based tokenized asset platform digital debt service as the first third-party custodian.
According to a press release on Thursday, the first Transaction State Street was a $100 million tokenized commercial paper issued by Singapore-based banking group Oversea-Chinese Banking Corporation (OCBC).
State Street Investment Management, the bank’s asset management unit, has purchased the debt. JP Morgan Securities served as a placement agent.
This move has been increasingly involved in traditional financial heavyweights and global banks in tokenizing financial instruments, or tokenizing real-world assets (RWAs), placing bonds, funds and credits on the blockchain rail. This process promises operational benefits such as increased efficiency, faster, 24-hour settlements, and reduced management costs.
The tokenized asset market could swell in the coming years, but forecasts for McKinsey’s $2 trillion by 2030 to Ripple and BCG’s nearly $19 trillion by 2033 will differ.
By joining JPMorgan’s blockchain platform, State Street is now able to provide custody of clients of tokenized debt securities without changing the traditional service model.
In this particular case, State Street manages client holdings with a digital wallet connected directly to JPMorgan’s system, eliminating manual payment and record management procedures. The infrastructure supports delivery and payment settlement, along with the same-day (T+0) settlement options, and automates corporate measures such as interest payments and redemption through smart contracts.
“This launch reflects meaningful advances in digital strategy: manage digital wallet-on-chain and lays the foundation for interoperability across the blockchain network.”
The bank has pursued an initiative to tokenize bonds and money market funds, Millrod said in October. The company also selected Swiss-based Taurus as its tokenization partner.
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