State Street Works on Tokenized Bond and Money Market Fund; No ‘Current Plans’ for Stablecoin Project

Donna Milrod, the bank’s chief product officer, stated in an interview with Financial News that there is no present intention to launch a stablecoin or convert deposits into tokens. However, this doesn’t rule out the possibility of doing so in the future; they simply don’t see it as necessary at the moment.

Instead, the business currently has two active tokenization initiatives, one for a bond and another for a money market fund, which are expected to continue until part of the coming year, according to Milrod. The goal is to create tokenized collateral that enables traders to utilize it as margin without having to liquidate their assets to provide cash.

Milrod stated during the interview that mere operational efficiency isn’t sufficient; it also requires a commercial aspect. The industry is currently working on determining where the commercial potential lies.

In simpler terms, Milton proposed that the use of collateral tokens could have mitigated or lessened crises like the one in 2022, often referred to as a “liability-driven” crisis. During such crises, pension funds might have used collateral tokens for margin calls instead of selling their assets to gather cash.

According to a report by CoinDesk in August, State Street has been expanding its involvement in the digital asset sector. The bank has chosen Taurus, based in Switzerland, as a partner for tokenization. At that time, Milrod mentioned that they would provide custody services for digital assets once the regulatory landscape in the U.S. becomes more favorable.