State Street Plans to Launch Stablecoin for Crypto Payments
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Boston-based financial services and banking giant State Street Corp. is exploring ways to dive into blockchain technology, aiming to build its own stablecoin and deposit token. This significant move will enable the firm to settle payments via digital asset technology.
State Street Opts USD for Stablecoin Creation
On July 16, Bloomberg reported that the company has generated ‘higher-than-expected’ revenue and interest income this year. As a result, the firm is now considering creating a stablecoin and a deposit token, expanding its services in ‘digital-cash consortiums’. Moreover, an unknown source linked to the matter revealed that the upcoming stablecoin will likely be pegged on the U.S. dollar to ensure stability and integrity.
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The asset management firm is also evaluating methods to introduce a deposit token representing customer deposits on the blockchain network. A deposit token will be authorized by a licensed depository institution like a bank and recorded on the blockchain. However, State Street’s officials declined to disclose any details.
Reports disclose that the company also plans to leverage its investments by integrating with Fnality, a U.K.-based payment solution provider. The initiative will simplify payment solutions by enabling firms to bridge gaps between traditional finance and digital asset industries.
State Street’s Partnerships in Crypto and ETF Launch
It’s not the first time State Street has integrated into crypto spaces. In 2021, the company organized a dedicated unit to research the tokenization process of digital assets and configure overall business operations. Last month, the firm joined hands with Galaxy Asset Management to launch an exchange-traded fund (ETF). It has also applied to the U.S. Security and Exchange Commission (SEC) for approval of various ETFs. These include SPDR Galaxy Emerging Technology Enablers ETF, SPDR Galaxy Digital Asset Ecosystem ETF, and Hedged Digital Asset Ecosystem ETF.
State Street is the world’s third-largest ETF manager. The financial giant currently holds more than $44.31 trillion in custody and manages around $4.42 trillion under investment. The company boasts $23.8 billion shareholder equity and operates in 100+ countries with over 46,000 employees worldwide.
Stablecoins Regulation in U.S.
Payment firms have always faced challenges regulating stablecoins, especially in the U.S., due to the absence of a proper framework in the state. Congress members, including Maxine Waters and Patrick McHenry, have been actively trying to establish a bill for stablecoin regulations. So far, the primary regulatory entity for stablecoin issuing has not been allocated. Still, the bill circulates in the Senate as a draft.
SEC Chair Gary Gensler has recently labelled stablecoins as money market funds (equivalent to cash) over other securities. However, the regulatory authority probed Paxos last week over Binance USD issuance. As the digital asset world gains fame, threats from financial watchdogs and regulatory scrutiny also increase.
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