State Street, J.P. Morgan Complete $100M Tokenized Debt Deal
State Street Enters Tokenized Debt Market with J.P. Morgan
State Street, the Boston-based custodian bank overseeing $49 trillion in assets, is expanding its presence in digital assets. The firm has joined J.P. Morgan’s Digital Debt Service platform, a blockchain-based system for tokenized assets, as its first third-party custodian.
The initial transaction involved a $100 million tokenized commercial paper issuance by Oversea-Chinese Banking Corporation (OCBC), a major Singaporean banking group, according to a recent announcement.
State Street Investment Management, the bank's asset management division, purchased the debt, with J.P. Morgan Securities acting as the placement agent.
Tokenization Gains Traction
This move highlights the increasing adoption of real-world asset (RWA) tokenization by traditional financial institutions and global banks. Placing assets like bonds, funds, and credit on blockchain networks offers potential benefits, including:
- Increased efficiency
- Faster and around-the-clock settlements
- Lower administrative costs
Market forecasts for tokenized assets vary, with projections ranging from McKinsey's $2 trillion by 2030 to Ripple and BCG’s estimate of nearly $19 trillion by 2033.
Custody and Settlement Innovation
By integrating with J.P. Morgan’s blockchain platform, State Street can now provide custody services for tokenized debt securities while maintaining its established servicing model.
In this instance, State Street manages client holdings through a digital wallet directly connected to JPMorgan’s system, streamlining settlement and recordkeeping. The infrastructure facilitates delivery-versus-payment settlement, supports same-day (T+0) settlement, and automates corporate actions like interest payments and redemptions via smart contracts.
Donna Milrod, State Street’s chief product officer, stated that this launch marks a “meaningful step forward” in their digital strategy, enabling on-chain digital wallet management and setting the stage for interoperability across blockchain networks.
State Street has previously explored tokenizing a bond and a money market fund and has partnered with Taurus, a Swiss firm, for tokenization initiatives.