State is a global financial services company and they’re not new to the tokenization space. However, they’ve recently become more loud about their efforts and are looking to push the industry forward. Specifically, they’re looking to tokenize money market funds and bonds to improve collateral mobility.

This is one of the biggest pieces of adoption we’ve seen from an institutional perspective as operational efficiencies and second order effects are what they’re focusing on. Putting these assets onchain makes life easier for the firm by reducing manual reconciliation, settlement times, potential human error, and more.

Speaking of settlement, they’ve been participating in different consortiums for “digital cash” and are partnering with Finality for settlement options while exploring stablecoins and tokenized deposits.

Tokenized bonds should experience more liquidity than their traditional counterparts and money market funds tend to be a great way to manage one’s treasury. Imagine parking money onchain, generating yield, and use those tokenized shares for posting margin, trading out a portion for liquidity, or other use cases.

Custody, on the other hand, is a more complex endeavor due to remaining uncertainty from SAB 121. How will they solve for that? Just last month we saw a partnership announced with Taurus out of Switzerland for their tokenization and custody services. With these partnerships in mind and the explosive growth of tokenized liquidity products, I expect State Street to be operational by next year.