One of the most reputable financial custodians in the world, State Street, has become the first third-party company to use J.P. Morgan’s state-of-the-art Digital Debt Service.
J.P. Morgan has quickly expanded its footprint in blockchain-powered financial services during the last few years. Issuers can directly generate, manage, and service debt securities on distributed ledger technology with its Digital Debt Service. This is a product of the bank’s blockchain business, Onyx. Up until now, the custody of these digital bonds has been handled in-house or through special agreements.
State Street’s integration changes the landscape. By joining as the inaugural third-party custodian, the firm brings deep expertise, highly trusted infrastructure, and a global client network into the fold. Institutional investors can now hold, transact, and manage digital debt securities with the same confidence as traditional assets, powered by the traceability and automation inherent to blockchain.
Donna Milrod, Chief Product Officer at State Street, noted, “Through our direct participation in J.P. Morgan’s Digital Debt Service, we are advancing our ability to deliver a fully integrated front-, middle-, and back-office solution built on blockchain technology.”
State Street Initiative Benefits Institutional Investors
For pension funds, insurers, sovereign wealth funds, and asset managers, the secure custody of debt instruments is foundational. State Street’s platform, renowned for its robust risk controls and regulatory compliance, now extends these assurances to digital debt securities issued on J.P. Morgan’s network.
With the availability of real-time tracking and instant settlement, institutional clients benefit from streamlined operations, reduced counterparty risk, and enhanced transparency. Blockchain’s immutable ledger ensures auditability, while smart contracts automate coupon payments and maturities.
State Street’s move comes as interest in tokenized debt markets reaches new highs. Recent studies project global issuance of blockchain-based fixed income securities could surpass $400 billion by 2027. J.P. Morgan’s platform, already partnering with large corporates and sovereign issuers, positions itself as the central hub for a new digital bond ecosystem.
State Street’s role is pivotal. By serving as custodian, they not only increase investor confidence but also pave the way for other banks and asset service providers to join. The company says it will support a full suite of custody services, including account management, corporate action processing, and tax reporting for digital bonds held on the platform.
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