State Street & Galaxy Launch Tokenized Liquidity Fund, Backed by $200M from Ondo

Wall Street's traditional finance giants are finally getting their hands dirty with blockchain's core promise—and they're bringing a massive checkbook.

The Institutional Bridge

Forget speculative memecoins. This move targets a foundational problem in finance: unlocking capital trapped in illiquid assets. By tokenizing a fund, State Street and Galaxy aren't just dabbling in crypto; they're building a bridge for institutional capital to flow directly into digital asset strategies. It's infrastructure, not just investment.

Why $200M Matters

That number isn't just a headline figure. It's a signal. A $200 million anchor investment from a player like Ondo transforms a pilot project into a serious market vehicle. It provides immediate scale and credibility, telling other institutions the water's warm—and deep enough to swim in. This is how real-world assets (RWAs) move from PowerPoint slides to balance sheets.

The New Playbook

The old model of buying Bitcoin and hoping is over. The new institutional playbook is about yield, structure, and efficiency. A tokenized fund slashes administrative friction, enables near-real-time settlement, and opens the door to programmable finance. It's not an alternative to traditional finance; it's an upgrade.

One cynical finance jab: It's almost touching to see traditional finance discover 'liquidity' as a feature, decades after building an industry on the very lack of it.

The bottom line? This isn't another crypto fund launch. It's a blueprint. When a custodian like State Street and a crypto-native firm like Galaxy align with a nine-figure check, they're not testing the waters—they're charting the map for the next wave of capital. The race to tokenize everything just found its pole position.

State Street Investment Management and Galaxy Asset Management have partnered to launch a tokenized private liquidity fund expected to receive approximately $200 million in seed investment from ONDO Finance, the firms announced Wednesday.

The State Street Galaxy Onchain Liquidity Sweep Fund, or SWEEP, will provide qualified purchasers with access to onchain liquidity management using PYUSD stablecoins for subscriptions and redemptions. The fund is targeted to launch on Solana in early 2026, with future integrations planned for Stellar and ethereum blockchains.

SWEEP will combine State Street's cash and liquidity management operations with Galaxy's blockchain infrastructure capabilities. State Street Bank and Trust Company will serve as custodian for the fund's treasury holdings, while Galaxy's digital infrastructure will power the tokenization technology and secure management of SWEEP tokens.

The announcement follows growing institutional adoption of tokenized treasury products and onchain cash management solutions as traditional financial institutions develop blockchain-based infrastructure.

Kim Hochfeld, global head of cash and digital assets at State Street Investment Management, described the partnership as driving evolution of traditional finance infrastructure onchain. The collaboration represents increasing convergence between traditional finance and decentralized finance sectors in asset management and capital markets.

Steve Kurz, global head of asset management at Galaxy, said SWEEP reimagines how institutional DeFi investors hold cash and manage operations by offering an onchain liquidity fund option for digital investors.

Ian De Bode, president of Ondo Finance, characterized tokenization as becoming the connective tissue between traditional finance and the onchain economy. Ondo's planned investment WOULD anchor the fund while supporting growth of Ondo's own fund offering institutional investors exposure to short-term US Treasuries with round-the-clock minting and redemption capabilities.

Galaxy plans to utilize chainlink to facilitate cross-chain interoperability as the fund expands to additional blockchain networks. The fund will be available to qualified purchasers meeting specific eligibility criteria and minimum investment thresholds.

The SWEEP launch extends the partnership between State Street Investment Management and Galaxy. In September 2024, State Street launched three actively managed ETFs sub-advised by Galaxy focused on digital assets and disruptive technologies.