In July Bloomberg reported that State Street was exploring tokenized deposits and a stablecoin. However, Donna Milrod the firm’s head of product, told the Financial News that the bank is not currently planning either of these, although she doesn’t rule them out in the future. However, it is working on tokenizing a bond and tokenizing money market funds (MMFs) for use as collateral.
Using MMFs as collateral means the funds don’t need to be liquidated in order to be used for margin calls. Tokenization also usually supports instant settlement rather than having to wait for redemption.
Collateral mobility is one of the killer use cases for institutional DLT. Onyx by JP Morgan has its Tokenized Collateral Network with BlackRock tokenizing the shares of one of its money market funds late last year. It then pledged them as collateral for a derivatives contract with Barclays.
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