State Street, Galaxy Launch Tokenized Liquidity Fund With $200M Ondo Investment

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.