Galaxy Digital is bringing DeFi to TradFi with State Street fund
Having already gotten a bullish rating this week from Wall Street for its "multi-engine growth model" that spans cryptocurrencies and AI data infrastructure, Galaxy Digital (GLXY) is set to build on that growth engine through the traditional finance space.
State Street Investment Management said that it is partnering with Galaxy Asset Management, an affiliate of Galaxy Digital, on the forthcoming launch of the State Street Galaxy Onchain Liquidity Sweep Fund (SWEEP).
SWEEP will be a tokenized private liquidity fund that will utilize PYUSD stablecoins for subscriptions and redemptions. The fund is expected to debut on the Solana (SOL) blockchain in early 2026, according to State Street.
The firm said that it will be available to qualified purchasers who meet certain eligibility requirements and minimum investment amounts. Ondo Finance will be seeding the fund with $200 million.
State Street Bank and Trust Company, an affiliate of State Street Investment Management, will serve as custodian for the fund's treasury holdings.
While it will be debuting on Solana, SWEEP will later be integrated with other blockchains at some point in the future, including Ethereum and Stellar. Galaxy will utilize Chainlink to facilitate cross-chain interoperability.
“Innovation and partnership are at the heart of our ethos at State Street Investment Management and to that end we’re thrilled to deepen our relationship with Galaxy by bringing this groundbreaking product to market together,” Kim Hochfeld, global head of cash and digital assets for State Street Investment Management, said in a statement. “By partnering with Galaxy, we will push the envelope together and drive the evolution of the TradFi landscape onchain.”
TradFi and DeFi are innovating together
Hochfeld added that the financial markets are now seeing "what’s possible when TradFi and DeFi sector players unite, and it’s increasingly clear that joint efforts like this stand to have a far-reaching impact on the future of asset management and capital markets.”
State Street and Galaxy Asset Management previously teamed up last year to launch three actively managed "digital asset and disruptive technology focused" ETFs.
Galaxy Digital founder and CEO Mike Novogratz has become one of the most prominent players and thought leaders in the crypto space, but he got his start in traditional finance. He began his career at Goldman Sachs and then worked at Fortress Investments before founding Galaxy.
Back in 2022, Novogratz said that the only thing holding back Wall Street from entering the DeFi space were regulatory hurdles, but that eventually a shift would begin to happen away from traditional banks and towards DeFi.
"Those things are going to be solved," Novogratz said. "And once they're solved, DeFi is going to win because it's better. It settles atomically, which means it settles that day. So there's no settlement risk. It's transparent."
Of course, a number of those regulatory issues have now been solved, leading to increasingly fewer barriers between TradFi and DeFi.
State Street said that the SWEEP fund is combining its "decades-long expertise in traditional cash and liquidity management" together with "Galaxy’s deep capabilities in blockchain infrastructure"
The firms see the fund as being a way for investors to get access to 24/7 liquidity.
“SWEEP is a game-changing collaboration that will offer digital investors an onchain liquidity fund option, reimagining the way institutional DeFi investors hold cash and manage their operations,” Steve Kurz, global head of asset management at Galaxy, said in a statement.
Galaxy's stock gained 1.2% on Thursday and is up 27.1% for the year. Galaxy Digital (GLXY) stock is gaining momentum as the firm partners with State Street to launch the SWEEP onchain liquidity fund using PYUSD on Solana.