The race to define institutional "onchain cash" intensifies as major financial players enter the tokenized asset space. State Street Investment Management and Galaxy Asset Management, in partnership with Ondo Finance, are launching a novel tokenized private liquidity fund designed to operate around the clock on public blockchains.
Key Takeaways
- Major Collaboration: State Street, Galaxy, and Ondo are launching the SWEEP fund, a tokenized private liquidity vehicle.
- Initial Platform: The fund will debut on the Solana blockchain in early 2026, with plans to expand to Stellar and Ethereum.
- Significant Seed Capital: Ondo Finance is expected to anchor the fund with a $200 million investment.
- 24/7 Liquidity: The fund aims to provide continuous onchain liquidity using the PayPal USD (PYUSD) stablecoin.
- Converging Expertise: The partnership combines traditional finance custody, digital asset infrastructure, and real-world asset (RWA) tokenization.
Building the Onchain Cash Infrastructure
The planned State Street Galaxy Onchain Liquidity Sweep Fund (SWEEP) is designed to take cash "sweep" balances—idle funds automatically moved to interest-earning accounts—and tokenize them directly onto public blockchains. This creates a potential new source of liquidity that is accessible outside traditional market hours.
“By partnering with Galaxy, we will push the envelope together and drive the evolution of the TradFi landscape onchain,” said Kim Hochfeld, global head of cash and digital assets for State Street Investment Management.
The fund will use Chainlink's Cross-Chain Interoperability Protocol (CCIP) to facilitate its multi-chain rollout, starting on Solana. This move places SWEEP in direct competition with existing tokenized cash-management products from giants like BlackRock and Franklin Templeton.
Strategic Roles in a Tokenizing Market
This collaboration exemplifies how roles are crystallizing in the merging worlds of traditional and digital finance:
- State Street provides regulatory expertise, custody via State Street Bank and Trust Company, and its established tokenization platform.
- Galaxy Digital contributes the core digital asset infrastructure and tokenization technical knowledge.
- Ondo Finance brings significant capital, an existing RWA distribution network, and expertise in packaging assets like U.S. Treasuries for onchain markets.
“Tokenization is rapidly becoming the connective tissue between traditional finance and the onchain economy,” said Ian De Bode, president of Ondo Finance.
Solana's Emergence as a Tokenization Hub
The choice of Solana as the initial launchpad highlights its growing status as a preferred blockchain for tokenized assets and high-throughput financial applications. Institutions are attracted by its lower fees and fast settlement times. This follows other major adoptions, such as Western Union and Pfizer using Solana for digital asset initiatives, and the growth of physical staked ETFs on the network.
This launch is part of a broader trend where tokenized funds and securities are evolving from isolated pilots into core components of a new, interoperable onchain capital markets infrastructure.
