State Street Reportedly Creating Its Own Stablecoin and Deposit Token

The company is considering new ventures in blockchain technology and aims to use blockchain to settle payments.

Boston-based financial services giant State Street is reportedly planning to launch its own stablecoin and deposit token.

According to a Friday report by Bloomberg, citing people familiar with the matter, State Street is also considering using blockchain technology to settle payments. The move is part of the company’s broader strategy to integrate digital assets into its services.

The proposed stablecoin would be a blockchain-based currency pegged to a traditional asset, likely the dollar, while the deposit token would represent customer deposits on a blockchain. A deposit token is essentially a regular deposit held by a licensed depository institution, such as a commercial bank, but it is recorded on a blockchain.

State Street’s plans were first reported by Bloomberg.

The move comes amid a wave of interest in stablecoins from major players in the financial industry. For example, PayPal launched its own dollar-backed stablecoin, PYUSD, in collaboration with Paxos last year.

Retail investors and fintech institutions are also rapidly adopting stablecoins. However, regulation for stablecoins in the U.S. remains murky, with ongoing legislative efforts led by Reps. Maxine Waters and Patrick McHenry, and discussions in the Senate.

SEC Chair Gary Gensler has likened stablecoins to money market funds, but recent developments suggest a potential easing of regulatory scrutiny.

State Street Global Advisors, the asset management arm of State Street, recently partnered with Galaxy Asset Management to launch exchange-traded funds focusing on crypto firms. The firm also established a dedicated digital assets unit in 2021.