State Street & Galaxy Launch $200M Tokenized Liquidity Fund: Ondo’s Massive Bet Signals Institutional Rush

Wall Street just cut out the middleman. Again.

Forget waiting for traditional settlement cycles. A new fund from State Street and Galaxy Digital is tokenizing private credit—turning illiquid assets into digital securities that trade 24/7. The move bypasses legacy infrastructure, slashing costs and unlocking capital trapped in slow-moving markets.

The $200 Million Vote of Confidence

Ondo Finance didn't just dip a toe—it plunged in headfirst with a $200 million anchor investment. That's not seed funding; it's a statement. It signals that serious players see tokenization not as a niche experiment, but as the inevitable plumbing for future finance. The fund targets yield-generating private assets, offering institutional investors a digital wrapper for exposure they couldn't easily get before.

Why This Isn't Just Another Crypto Fund

This isn't a speculative bet on token prices. It's a utility play. By representing ownership on a blockchain, the fund automates compliance, enables instant secondary trading, and provides real-time transparency—things the traditional fund admin world struggles with on a good day. It turns fund units into programmable, liquid assets.

The Cynical Take

Of course, Wall Street's embrace of 'disruption' always comes with a twist—they're often just building a more efficient, digital version of their own fee-generating machine. The middlemen aren't disappearing; they're just putting on a tech hoodie.

The bottom line? When a custody giant like State Street and a crypto native like Galaxy team up, and a major player backs it with $200 million, the writing is on the blockchain. Tokenization is moving from powerpoint slides to portfolios. The race to digitize every asset class is officially on, and the old guard is leading the charge—probably to make sure they still get a piece of the action.

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.