Key Points:

• State Street has become the first third-party custodian on JPMorgan’s blockchain platform for tokenized assets.
• The inaugural transaction involved a $100 million issuance of tokenized commercial paper from OCBC.
• The tokenized assets market is expected to experience robust growth, with projections indicating a potential rise to $2 trillion by 2030 and nearly $19 trillion by 2033.

State Street, a custody bank located in Boston with $49 trillion in assets under management, is expanding its involvement in digital assets by joining JPMorgan’s Digital Debt Service blockchain platform as the primary third-party custodian.

The first deal led by State Street was a $100 million tokenized commercial paper issuance by Oversea-Chinese Banking Corporation (OCBC), based in Singapore. According to a recent press release, this signifies a pivotal moment for the asset management sector.

State Street Investment Management, the asset management division of the bank, acquired the debt while J.P. Morgan Securities facilitated the placement.

This initiative aligns with the growing involvement of major financial institutions in the tokenization of financial instruments and real-world assets (RWAs), with the intention of placing bonds, funds, and loans onto blockchain systems. These efforts promise benefits such as improved operational efficiency, expedited settlement times, and a reduction in administrative costs.

While projections vary, the tokenized asset sector could significantly expand in the coming years. Estimates range from McKinsey’s $2 trillion prediction by 2030 to Ripple and BCG’s projection of almost $19 trillion by 2033, reflecting diverse forecasts within the industry.

By integrating with JPMorgan’s blockchain platform, State Street offers clients a way to store tokenized debt securities while maintaining its conventional servicing framework. In practice, this arrangement allows State Street to oversee client assets in a digital wallet that connects directly to JPMorgan’s system, enhancing efficiency by minimizing manual processes in settlement and recordkeeping.

The setup supports delivery-versus-payment settlements, offers an option for same-day settlements, and automates corporate actions like interest payments through smart contracts.

“This launch represents a significant advancement in our digital strategy, where we manage a digital wallet on-chain and lay the groundwork for interoperability across blockchain networks,” stated Donna Milrod, State Street’s chief product officer. Milrod noted that the bank has been actively pursuing projects to tokenize both a bond and a money market fund, and has partnered with Swiss company Taurus for tokenization efforts.