State Street Expands Tokenization Push as Banks Rush to Bring Cash and Funds Onchain

State Street Corp. has expanded its tokenization strategy, launching a new digital-asset platform to offer tokenized deposits, money-market funds, and exchange-traded funds. The firm, which manages $51.7 trillion in assets, is joining a growing list of financial institutions pushing into digital assets as regulatory clarity and market demand evolve. The move signals a broader shift in the financial industry as traditional custodians integrate blockchain-based products to improve settlement efficiency and expand digital offerings according to Bloomberg.

Blockchain technology has become a key focus for banks and asset managers in 2026, with projects like tokenized water infrastructure in Southeast Asia, blockchain-based settlement platforms, and tokenized equity offerings gaining traction. These innovations aim to streamline transactions and increase access to global markets, particularly in regions with evolving capital infrastructure.

The tokenization of real-world assets (RWAs) is growing rapidly, with distributed RWA market caps reaching $19.72 billion as of January 2026. Tokenized U.S. Treasuries, institutional funds, and private credit loans dominate the space, reflecting strong institutional interest in programmable and on-chain financial instruments.

Why Did This Happen?

State Street's decision follows a wave of institutional adoption driven by technological advancements and regulatory progress. The firm cited the growing demand for on-chain cash and the need to provide clients with faster, more transparent settlement options as key motivations.

The U.S. Genius Act, which provided regulatory clarity for stablecoins, and broader support for digital assets from policymakers have reduced barriers to adoption. As a result, institutions are now prioritizing digital infrastructure to remain competitive in a fast-evolving financial landscape.

How Markets Responded

State Street's move has been welcomed by both traditional and digital-native participants. Competitors like Bank of New York Mellon and JPMorgan have also launched tokenized deposit services, with BNY highlighting its private blockchain and instant settlement capabilities as key differentiators.

In the tokenized equity space, platforms like Bitget have seen explosive growth, with cumulative tokenized stock futures volume exceeding $18 billion as of December 2025. Institutional traders accounted for 82% of spot trading volume on the platform, reflecting a structural shift in market participation.

What Are Analysts Watching Next?

Analysts are closely watching how tokenized assets scale across multiple jurisdictions and blockchain networks. Ethereum remains the dominant platform for distributed RWAs, with $12.6 billion in assets, but competitors like Solana, BNB Chain, and Stellar are gaining traction.

The ability of tokenized Treasuries and institutional funds to function as reliable collateral in on-chain lending and trading protocols is another critical factor. If these assets can serve as a stable foundation for credit and liquidity, the market could see rapid adoption and increased efficiency according to CryptoSlate.

Custody and regulatory frameworks will also play a major role in determining long-term success. As more institutions seek to tokenize assets, the need for secure, compliant, and interoperable solutions will intensify. Providers like Securitize and platforms like LSEG's DiSH are positioned to benefit if they can scale their offerings effectively.