Boston-based financial services and banking giant State Street is reportedly exploring ways to process payments via blockchain, according to an anonymous source.
The company, which recently reported higher-than-expected revenue and interest income, is considering creating its own stablecoin and deposit token.
A stablecoin is a type of cryptocurrency pegged to a stable asset, such as the dollar. The proposed deposit token will represent customer deposits on a blockchain. But those plans have not been made public and a State Street spokesman declined to comment.
In addition to creating its own digital currencies, State Street is also considering joining digital cash consortium efforts. The company is considering settlement options through its investment in Fnality, a blockchain payments startup expanding in the US. A spokesperson for Fnality also declined to comment.
Using blockchain technology for payment settlements has been a long-standing proposition in the crypto industry. Blockchain, a digital ledger, could potentially make payments faster and cheaper. Many traditional financial companies, including PayPal, Visa and Mastercard, have already started offering crypto payment services. PayPal introduced its own stablecoin last year, while Visa and Mastercard enable stablecoin-based payments. JPMorgan Chase & Co., the largest bank in the USA. is also exploring deposit tokens.
However, the launch of a deposit token by State Street will require approval from US banking regulators.
State Street is increasingly stepping up its digital asset efforts. Earlier this year, the company aimed to achieve tighter integration between traditional finance and digital assets by integrating team members focused on digital assets into its overall business. State Street, the third-largest ETF manager, already offers services such as fund management and accounting for cryptocurrency ETFs. The company also expanded its digital asset efforts by partnering with Galaxy Asset Management to develop digital asset ETFs.
State Street plans to focus on tokenizing assets such as funds in the coming months. According to a recent digital asset survey conducted by the company, almost half of the 300 investment firms surveyed said they are ready to trade digital assets on and off distributed ledgers and blockchains, provided they have the appropriate infrastructure.
*This is not investment advice.