Market participants said improving collateral mobility is a critical benefit of tokenization but highlighted that legal and regulatory certainty is needed for adoption to scale.
Kim Hochfeld, global head of digital and cash at State Street Investment Management, said collateral mobility is a “killer app” for tokenization. She spoke on a panel at the Digital Assets Week conference in London on 6 October 2026.
“Using tokenized money market funds as collateral is the holy grail,” she added.
Kim Hochfeld, Stete Street IM
Hochfeld continued that tokenization makes collateral mobile and portable, allows real-time movement versus the slow convoluted process in traditional finance which involves a number of intermediaries, and increases balance sheet efficiency.
State Street released findings from its 2026 Digital Assets Study on 6 October and 51% of respondents expect digital assets to become mainstream within five years, up from 42% in 2025 and 11% in 2024.
The global study of 300 asset managers, asset owners and wealth managers found that 35% of respondents already manage or distribute digital assets, while another 28% have the provider relationships and infrastructure in place to do so if client demand arises.
Angus Fletcher, head of digital asset solutions at State Street, said in a statement: “Investors are spending less time debating the technology and more time focused on infrastructure, operations, regulation and risk. That tells us the market is maturing.”
Source: State Street 2026 Digital Assets Study
In May this year State Street Investment Management and Galaxy Asset Management, an affiliate of digital asset fund manager, launched SWEEP, the State Street Galaxy Onchain Liquidity Sweep Fund. This is a tokenized private liquidity fund designed to enable 24/7 onchain cash management via stablecoin, subject to availability of stablecoin in the fund’s portfolio. State Street IM said at the time that the launch represents a milestone in the firm’s digital strategy to offer investment solutions onchain and support 24/7 programmatic trading and liquidity for cash management to onchain-native clients, as well as acting as a bridge to traditional finance (TradFi) clients looking to move onchain.
Yie-Hsin Hung, State Street IM
Yie-Hsin Hung, president and chief executive of State Street Investment Management, said in a statement: “This fund allows us to bring the TradFi landscape onchain in a resilient way, guided by our long-standing focus on innovation, risk management and client outcomes.”
Galaxy’s Digital Infrastructure, provides the tokenization technology and digital infrastructure which allows holders to sweep their stablecoin into the yield-bearing fund. SWEEP allows investors to use PayPal USD (PYUSD) stablecoins for subscriptions and redemptions, subject to portfolio availability, and is available to qualified purchasers that meet certain eligibility criteria and minimum investment amounts.
Mike Novogratz, founder and chief executive of Galaxy, said in a statement that the firm has always believed that traditional finance and crypto would converge on the same rails. SWEEP is an example of that, with a fund managed by an experienced cash manager being available for investors onchain, on infrastructure Galaxy built for institutions.
Hannah Winter, head of digital cash at BlackRock, agreed on the panel that collateral mobility is a critical use case for tokenization, but highlighted that the technology, market structure and value to investors need to improve in order to scale.
Hannah Winter, BlackRock
“Adoption will grow with regulatory and legal certainty,” added Winter. “Regulators need to explicitly allow money market funds to be used as collateral, set out capital treatment and change the rule books.”
Winter said BlackRock is liasing with regulators on being able to use tokenized gilts, Treasuries and money market funds as collateral as market infrastructure is rapidly improving.
Lucy Snowball, director, digital assets product at BNY, said on the panel that the firm clears 90% of Treasuries globally so that is the firm’s primary focus. She said: “Moving Treasuries 24/7 will be a game changer.”
Kate Lowe, head of product strategy at Euroclear UK and International, highlighted the central securities depository (CSD)’s project Pythagore with the Banque de France on the panel. She added: “Our focus is on scale by moving an entire market.”
Pythagore aims to tokenize the negotiable European commercial paper, the largest short-term debt market in euros within the Europe Union. The Banque de France said in October last year that the market had €310bn outstanding,
The market offers issuers competitive funding conditions, depth, and is a particularly efficient way to direct short-term liquidity. The first issue is due in production by the end of 2026. The project will ramp up in 2027 with migration to Euroclear’’s digital asset infrastructure by 2028.
Lowe said that the ultimate goal for blockchain technology should be to give users rights to collateral onchain, without the need to move assets. She argued: “Velocity could increase while the collateral stays where it is.”
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