State Street, Galaxy and Ondo roll out 24/7 tokenized cash strategy with Solana-based sweep fund
State Street Investment Management and Galaxy Asset Management are preparing to launch a tokenized private liquidity fund on Solana that aims to move institutional “sweep” cash directly onchain, creating a new always‑on source of dollar liquidity for crypto markets.
The vehicle, called the State Street Galaxy Onchain Liquidity Sweep Fund (SWEEP), will accept and redeem PayPal’s PYUSD stablecoin for accredited investors, according to the firms. Ondo Finance is expected to seed the fund with around $200 million, cementing a direct link between one of the most active real‑world asset (RWA) tokenization platforms and State Street’s emerging digital‑asset infrastructure.
Galaxy Digital will provide the underlying blockchain and tokenization technology stack, while State Street Bank and Trust Company, an affiliate of State Street Investment Management, will serve as custodian. This pairing gives the product a traditional, highly regulated banking backbone alongside a crypto‑native technology provider.
The first deployment of SWEEP is scheduled for early 2026 on the Solana blockchain. After that, the partners intend to expand to other networks, including Stellar and Ethereum. Interoperability between these chains is planned to be enabled through Chainlink’s Cross‑Chain Interoperability Protocol (CCIP), allowing the fund’s tokenized positions to move across different ecosystems without fragmenting liquidity.
A new phase in the “onchain cash” race
The initiative throws another major player into an increasingly competitive arena: the effort to define what institutional “onchain cash” will look like in practice. Large asset managers have already begun offering tokenized cash‑management products, such as tokenized money‑market and short‑duration fixed‑income funds, which live on public blockchains but remain regulated under existing securities frameworks.
Ondo Finance has been one of the more aggressive actors in this space, creating tokenized wrappers for U.S. Treasuries and other credit exposures designed to plug directly into decentralized finance and crypto trading venues. By committing $200 million of seed capital to SWEEP, Ondo effectively folds its distribution network and RWA expertise into State Street and Galaxy’s institutional tokenization stack.
Executives at the firms frame the venture as a step toward merging traditional market infrastructure with the always‑on nature of blockchain networks. Kim Hochfeld, global head of cash and digital assets at State Street Investment Management, emphasized that the collaboration with Galaxy is intended to “push the envelope” and move more of the traditional finance landscape onchain.
Ian De Bode, president of Ondo Finance, described tokenization as the emerging “connective tissue” between legacy financial markets and the digital asset economy. He noted that Ondo’s anticipated investment is meant not only to anchor SWEEP, but also to reinforce the growth of its own fund products that give institutions exposure to short‑term U.S. Treasuries with instant, 24/7 mints and redemptions.
From pilots to an onchain capital markets stack
The timing of SWEEP’s launch coincides with a broader shift in how tokenized funds and tokenized equities are being used. Rather than isolated experiments, these products are beginning to look like components of a coherent onchain capital markets stack.
On the equity side, some issuers are already testing programs that allow public companies to issue shares directly on blockchains such as Ethereum and Solana, taking in stablecoins as payment and settling immediately to investor wallets. Combined with tokenized bond and cash vehicles, these developments hint at a future in which primary issuance, secondary trading, collateral management and cash sweeps could all occur within a unified onchain environment.
Against this backdrop, the State Street‑Galaxy‑Ondo collaboration illustrates how roles are naturally dividing between traditional financial heavyweights and crypto‑native specialists. State Street contributes regulatory credibility, large‑scale custody and risk frameworks familiar to institutional allocators. Galaxy adds digital‑asset infrastructure, tokenization capabilities and blockchain integration. Ondo plugs in capital plus an existing user base already comfortable with accessing RWAs onchain.
Why sweep funds matter in a 24/7 market
The focus on “sweep” balances is particularly significant. In traditional finance, sweep programs automatically move idle cash from brokerage or bank accounts into short‑term instruments overnight, so that uninvested balances still earn some yield. In crypto, markets and trading venues never close, but the cash leg of transactions often remains stuck in legacy banking rails that operate on business‑day schedules.
By moving sweep functionality directly onto public blockchains and settling in PYUSD, SWEEP aims to close that gap. Institutional traders, market makers, or corporate treasuries holding stablecoins could potentially have their idle balances swept into a yield‑bearing tokenized fund and redeemed back into stablecoins at any time, without waiting for bank wires, cut‑off times or batch settlement windows.
If it works as designed, this model could transform how large players manage working capital in digital asset markets. Instead of leaving sizable sums in non‑yielding stablecoins or in off‑chain bank accounts, they could maintain onchain positions that are both liquid and interest‑generating, while still integrated with existing compliance and reporting requirements.
Why Solana was chosen as the initial venue
Launching first on Solana underscores an important subplot in the tokenization story: the competition among blockchains to become the preferred settlement layer for institutional assets. Solana has increasingly positioned itself as a high‑throughput, low‑fee environment suited to tokenized securities, stablecoin flows and complex trading strategies.
The network has already seen experiments ranging from tokenized public equities to various onchain liquidity and cash‑management funds. Its architecture, optimized for fast finality and relatively low transaction costs, appeals to institutions looking for operational efficiency without sacrificing user experience.
Several global firms have already piloted or deployed digital asset initiatives on Solana, including major payment processors and financial institutions handling large volumes of remittances and merchant transactions. Physical staked exchange‑traded funds (ETFs) launched on Solana have collectively grown to nearly $1 billion in assets under management, signalling that institutional size can indeed be accommodated on the chain.
For SWEEP, starting on Solana and then expanding to Stellar and Ethereum is a way to tap different liquidity pockets and regulatory preferences while maintaining a unified product. Each network has its own ecosystem of stablecoins, RWAs and DeFi protocols. Interoperability via CCIP is meant to ensure that capital is not trapped in silos, but can move where it is most efficiently deployed.
Implications for institutional adoption of tokenization
The collaboration among State Street, Galaxy and Ondo also speaks to how institutions are now thinking about tokenization: not as a niche experiment, but as a potential core component of future financial plumbing.
For asset managers, tokenized cash funds provide a new distribution channel. Shares can be represented as tokens that settle instantly, can be fractionalized, and can be embedded in programmable workflows, from collateral management to automated treasury operations. For banks and custodians, products like SWEEP represent a way to retain control over client assets while still enabling blockchain‑based settlement and interoperability.
For corporates and large investors, the appeal lies in operational flexibility. Treasury teams can, in principle, move between cash, short‑term instruments and trading venues in minutes instead of days. Compliance functions gain a transparent, auditable record of transfers. Risk managers can monitor exposures on a continuous, near‑real‑time basis.
Of course, this vision depends heavily on regulatory clarity. Tokenized funds must comply with existing securities rules, investor protections and disclosure regimes. Stablecoin flows used as fund subscriptions and redemptions must align with payments and money‑transmission regulations. The presence of a firm like State Street is a signal that these constraints are being designed into the product from the outset, rather than treated as an afterthought.
Challenges and open questions
Despite the enthusiasm, several questions remain. One is liquidity: for tokenized cash funds to function as true “onchain cash,” secondary markets must be deep enough for large positions to be entered and exited without significant slippage. Another is interoperability: while protocols like CCIP offer a framework, real‑world cross‑chain settlement at institutional scale is still in its early days.
There are also operational issues around key management, token custody and integration with existing back‑office systems. Even if a fund runs on Solana or Ethereum, the majority of institutional infrastructure — from portfolio management systems to risk engines — is still built around traditional securities identifiers and settlement cycles. Bridging those worlds is as much a data and workflow challenge as it is a technological one.
Additionally, the concentration of tokenized RWAs on a handful of public chains raises questions of resilience and systemic risk. If a major blockchain suffers an outage, congestion event or attack, the impact could extend beyond speculative crypto trading to the heart of institutional liquidity management.
How SWEEP fits into the broader RWA landscape
Within the wider RWA ecosystem, SWEEP is best seen as one layer among several. At one end are tokenized bank deposits and stablecoins, which function as digital representations of money. At the other are tokenized Treasuries, corporate bonds, real estate and private credit. Sitting in between are tokenized cash‑management funds like SWEEP, which combine the familiarity of short‑term instruments with the programmability of tokens.
Ondo’s involvement links SWEEP to a broader marketplace where institutions can allocate across different tokenized exposures — from pure cash surrogates to slightly longer‑duration fixed income — without leaving the onchain environment. This modularity could be key to building a true onchain yield curve, where maturities and risk profiles are expressed as interoperable building blocks.
As more products of this type launch, competition will likely move beyond just yield and fees to include factors such as blockchain choice, integration with DeFi, settlement speed, and the quality of institutional partners. State Street, Galaxy and Ondo are betting that a combination of big‑bank trust, crypto‑native infrastructure and RWA specialization will resonate with the next wave of institutional users.
What to watch as 2026 approaches
In the run‑up to the planned 2026 launch, several developments will be worth monitoring:
– Regulatory guidance around tokenized funds and stablecoin‑based subscriptions and redemptions, especially in major jurisdictions.
– The growth of PYUSD usage among institutions and trading venues, since it will be the settlement token for SWEEP.
– The evolution of Solana’s ecosystem, particularly in areas like institutional custody, compliance tooling and risk management.
– Progress on interoperability solutions such as CCIP and their adoption by other tokenized RWA issuers.
– Market reception to existing tokenized cash‑management products, which will provide early data on demand, liquidity and investor behaviour.
If these elements fall into place, the State Street Galaxy Onchain Liquidity Sweep Fund could mark a turning point: not just another crypto experiment by a traditional institution, but a foundational component in how institutional cash is held, moved and deployed in a tokenized financial system.
In that scenario, “onchain cash” would no longer be just a synonym for stablecoins. It would describe a spectrum of regulated, yield‑bearing, instantly settleable instruments — with SWEEP and similar funds acting as key bridges between bank accounts, capital markets and the 24/7 digital asset economy.