State Street Exploring Creating A Stablecoin

State Street is 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. This development is part of State Street’s broader strategy to integrate digital assets like crypto into its services and offerings. 

The proposed stablecoin would be a blockchain-based currency pegged to a traditional asset, most likely the dollar, while the deposit token would represent customer deposits on a blockchain. 

A deposit token is like a regular deposit held by a licensed depository institution, such as a commercial bank, but it is recorded on a blockchain.

Bloomberg was first to report this move.

The move follows similar efforts by other major players in the financial industry. For instance, PayPal launched its own dollar-backed stablecoin, PYUSD, in collaboration with Paxos last year.

There is rapid development happening as many retail investors and fintech institutions are beginning to adopt stablecoins. 

Regulation for stablecoins in the U.S. remains dubious, 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.

Last month, State Street Global Advisors 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.