Ondo, State Street, and Galaxy Launch Tokenized Liquidity Fund: Wall Street’s Boldest Bet on Blockchain Yet

Traditional finance giants are finally making their move—and it's a big one. Ondo Finance, State Street, and Galaxy Digital just pulled back the curtain on a new tokenized fund designed to bridge the gap between blockchain speed and institutional-grade assets. This isn't a side project; it's a direct shot across the bow of legacy settlement systems.

Unlocking Capital, One Token at a Time

The fund tackles a core Wall Street headache: locked-up capital. By tokenizing shares, the partnership aims to create near-instant secondary trading for assets that typically languish in quarterly redemption cycles. Think of it as turning a private equity stake into something you can trade as easily as a stock—but on a blockchain. State Street brings the custody and admin muscle, Galaxy provides the crypto market infrastructure, and Ondo supplies the tokenization tech. It's a full-stack assault on illiquidity.

Why This Time Is Different

Tokenization projects have come and gone, often drowning in their own hype. This trio changes the calculus. We're not talking about startups here. State Street's involvement signals a level of regulatory and operational comfort that previous efforts lacked. They're not just dipping a toe; they're building the plumbing. The target is clear: the trillions in real-world assets (RWA) that fund managers complain are stuck in slow-motion financial systems. The promise is to free that capital, making it work harder without the usual Wall Street friction—and fees, though let's see how long that part lasts.

The Cynical Take

Of course, watching traditional finance 'innovate' is like watching a glacier learn to tap dance. It takes a consortium of billion-dollar entities to replicate what crypto natives have been doing for years—proving that in finance, the real disruptive technology is still a permission slip from the right old-guard institution. They'll call it democratization while carefully guarding the gates to the party.

The launch is more than a new product; it's a legitimacy stamp for tokenization at the highest levels of finance. If it works, the floodgates open. If it stumbles, it'll be another case study for the next team trying to drag finance into the 21st century. The race to put the world's assets on-chain just got its most serious contender yet.

SEC clears Ondo’s expansion

The announcement follows a major regulatory milestone. On December 8, the U.S. Securities and Exchange Commission (SEC) formally ended its two-year investigation into ONDO Finance, issuing a notice of closure with no charges. The probe examined Ondo’s treasury tokenization products and whether the ONDO token fell under securities rules.

Ondo said the closure gives “a clear path forward” for U.S. securities tokenization, matching the SEC’s shift toward a more supportive approach to RWAs.

Why SWEEP matters for investors

SWEEP is designed as a tokenized money-market instrument, giving institutions a way to manage short-duration liquidity on-chain while maintaining exposure to State Street-managed assets. Ondo President Ian De Bode said the initiative represents “a major leap forward” in connecting traditional finance to the on-chain economy.

Ondo Finance has joined with State Street Investment Management and Galaxy Asset Management to announce plans for SWEEP, a new private tokenized liquidity fund bringing traditional cash management onchain.

OUSG, Ondo’s flagship tokenized fund, plans to serve as the lead anchor… pic.twitter.com/YM8yCRbVhc

State Street executives echoed the sentiment. Kim Hochfeld, Global Head of Cash and Digital Assets, described the partnership as an example of how “TradFi and DeFi players unite to push the next frontier of asset management.”

For OUSG holders, SWEEP WOULD enhance liquidity, diversify reserves, and broaden access to institutional cash assets alongside 24/7 Nexus settlement.

Tokenized funds across Wall Street

The institutional race toward tokenized money-market funds has accelerated through 2024 and 2025. In September, Fidelity launched FDIT, a fully tokenized Treasury fund backed almost entirely (over 99%) by Ondo’s OUSG. 

That product joined BlackRock’s BUIDL, Franklin Templeton’s BENJI, WisdomTree’s WTGXX, and Wellington’s ULTRA as major entrants into the tokenized liquidity sector.

With the SEC probe closed and OUSG expanding across major chains, Ondo is positioning itself at the center of the tokenization wave. SWEEP’s 2026 debut will test how fast institutions adopt multi-manager, on-chain cash solutions.

Also read: Ondo Finance Demands Clear Rules for Digital Asset Securities from SEC