A new wave of collaboration between traditional finance and blockchain firms is taking shape as State Street Investment Management, Galaxy Digital, and Ondo Finance prepare to launch a tokenized liquidity vehicle designed for institutional investors.
The initiative represents a broader shift in which major financial players are beginning to deploy real, production-ready tokenization products rather than limited pilot programs.
Key Takeaways
- State Street, Galaxy Digital, and Ondo Finance are launching SWEEP, an institutional on-chain liquidity fund on Solana.
- Ondo’s OUSG fund will act as an anchor investor, expanding its 24/7 tokenized Treasury liquidity network.
- The collaboration reflects growing integration between major asset managers and blockchain-native firms.
At the center of the effort is SWEEP, a private liquidity fund that will operate entirely on-chain and is scheduled to go live on Solana early next year. While many asset managers have explored tokenization, SWEEP is one of the first attempts to create a money-market-style instrument that settles on a public network used by both crypto-native and institutional firms.
How SWEEP Fits Into a New Institutional Liquidity Model
Rather than functioning as a standalone investment vehicle, SWEEP is meant to serve as a plug-in liquidity source across multiple tokenized funds. Ondo Finance, which has spent the past two years building tokenized Treasury ecosystems, plans to use its flagship product OUSG as an anchor investor in the new fund.
OUSG’s role is crucial: it already aggregates liquidity across tokenized Treasury products from some of the largest asset managers in the world. SWEEP will become an additional component within that system, effectively expanding the liquidity pool that OUSG taps for 24/7 settlement, redemptions, and allocations.
By incorporating SWEEP, OUSG’s portfolio will span offerings associated with BlackRock, Fidelity, Franklin Templeton, WisdomTree, Wellington Management, and FundBridge Capital, illustrating how diverse tokenized markets are becoming. The partnership also signals a new phase where traditional securities infrastructure is being rebuilt on-chain, with liquidity available around the clock instead of within legacy market hours.
Institutions Frame the Launch as a Rewriting of Market Infrastructure
Executives involved in the project say the initiative is less about creating a new fund and more about laying groundwork for a future in which short-term liquidity moves natively across blockchains.
Ondo’s President Ian De Bode described the collaboration as a breakthrough moment that shows traditional financial institutions are no longer experimenting but actively transitioning parts of their operations to public networks. State Street’s digital assets leadership echoed this view, noting that the partnership demonstrates how conventional asset managers and crypto companies can build shared market plumbing.
Galaxy Digital, meanwhile, sees SWEEP as part of a larger trend in which tokenized cash instruments become standardized products used for collateral, trading margins, and treasury management across global markets.
Regulatory Climate Shifts After SEC Pulls Back From Enforcement
The timing of the announcement is significant. Ondo Finance, the firm orchestrating much of the underlying tokenization infrastructure, recently learned that the U.S. Securities and Exchange Commission had closed its investigation into the company without recommending charges.
The probe, launched in October 2023, focused on whether Ondo’s tokenized U.S. Treasury instruments and its ONDO token violated securities laws. Under former SEC Chair Gary Gensler, tokenization initiatives were frequently targeted, casting uncertainty over the entire sector.
But the SEC’s posture has changed dramatically since Paul Atkins took over the agency. Atkins has signaled a willingness to allow tokenized markets to mature rather than being stifled by early regulation. The dismissal of Ondo’s case follows a series of abandoned enforcement actions involving major industry players including Coinbase, Ripple, and Kraken.
Industry analysts say the regulatory pullback gives firms like Ondo the space they need to expand nationwide and develop tokenized instruments that align with federal rules.
Tokenization Enters a New Phase
Between easing regulatory pressure and coordinated efforts from global financial institutions, tokenized liquidity markets appear poised for rapid acceleration. If SWEEP launches as planned, it could become one of the clearest demonstrations of how public blockchains are being integrated directly into institutional operations.
The partnership between State Street, Galaxy Digital, and Ondo Finance marks a turning point: tokenization is no longer a side experiment — it is becoming part of the core financial infrastructure shaping how assets move in the next decade.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/state-street-galaxy-and-ondo-launch-new-on-chain-liquidity-fund-on-solana/