State Street exploring creating a stablecoin

State Street is reportedly creating its own stablecoin and deposit token.

The company is considering new ventures into blockchain technology and aims to use blockchain to settle payments. The 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 customers’ deposits on the blockchain.

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

Bloomberg was the first to announce this move.

Stablecoin developments

The move follows similar efforts by other major players in the financial sector, such as PayPal last year partnering with Paxos to launch its own dollar-backed stablecoin, PYUSD.

Stablecoins are rapidly evolving as many retail investors and fintech organisations begin to embrace them.

Regulation for stablecoins in the U.S. remains in doubt, with ongoing legislative efforts led by Reps. Maxine Waters and Patrick McHenry, as well as debate in the Senate. SEC Chairman Gary Gensler has likened stablecoins to money market funds, but recent developments suggest a possible easing of regulatory scrutiny.

Last month, State Street Global Advisors partnered with Galaxy Asset Management to launch exchange-traded funds focused on crypto companies. The company also launched a dedicated digital assets unit in 2021.