State Street Corp (NYSE:STT) has tapped Swiss cryptocurrency firm Taurus as a strategic partner to enhance its digital asset services offering, including the tokenization of assets.
The financial services provider said it will use Taurus' comprehensive solutions for custody, tokenization, and node management to automate the issuance and management of digital assets, such as digital securities and fund management vehicles.
It highlighted that the collaboration comes at a time when institutional interest in digital assets is at an “all-time high.”
“The collaboration with Taurus underscores our ongoing commitment to further establishing ourselves as leaders in this growing asset class, and this important announcement only enhances our ambition to deliver to our clients an amazing digital asset experience,” State Street chief product officer and head of Digital Asset Solutions Donna Milrod said in a statement.
The service will launch “in the near future,” Milrod told Reuters.
What is tokenization?
Tokenization is the process of converting real-world assets or rights into digital tokens on a blockchain or another distributed ledger technology. These tokens represent ownership, rights or access to the underlying assets and can be traded or used within digital ecosystems.
Tokens can be used to represent financial assets, such as equities, bonds or other securities or intangible assets, such as intellectual property.
For example, earlier this year BlackRock Inc (NYSE:BLK) launched the USD Institutional Digital Liquidity Fund (BUIDL) on the Ethereum blockchain to provide investors with the opportunity to earn yields on tokenized US Treasuries.
Physical assets such as real estate, commodities like gold, or artwork can also be tokenized, allowing fractional ownership.
Diamond Lake Minerals Inc (OTC:DLMI), which specializes in the development of digital assets and SEC-registered security tokens, sees significant opportunities for tokenization.
“Tokenization, enabled by blockchain technology, broadens the investor base globally, allowing for smaller investments and creating liquidity,” CEO Brian J. Esposito told Proactive earlier this year. “This opens up opportunities for wealth creation previously available to a select few.”
The company recently announced that it has finalized a share exchange agreement with Horizon Fintex, the group behind the regulated tokenized securities exchange Upstream.