Galaxy Digital and State Street Investment Management have launched the SWEEP fund, a tokenized liquidity fund that brings institutional-grade cash management onchain. Qualified investors are able to deposit into and redeem from the fund using stablecoins [initially PayPal USD (PYUSD)] while at the same time generating yield on their idle cash. All available 24/7, in contrast to traditional funds constrained by banking hours.
The solutions offered by the SWEEP fund
The SWEEP fund leverages Galaxy’s digital infrastructure that enables tokenization technology and issuance management. NAV Consulting acts as the fund’s functioning transfer agent, while Galaxy leverages Chainlink NAVLink to publish the fund’s daily Net Asset Value (NAV) onchain, and Chainlink Cross-Chain Interoperability Protocol (CCIP) for secure cross-chain interoperability. Anchorage holds all stablecoin investments for the fund, and State Street Bank holds all underlying securities holdings.
The purpose of the SWEEP fund is to address a long-standing issue in the crypto market: idle stablecoins earn nothing, while moving cash into yield-bearing products often requires off-ramping to fiat, generally takes several days, and incurs high costs in transaction fees. SWEEP addresses this issue by allowing stablecoin holders to “sweep” their balances into a regulated, yield-generating, onchain Fund that operates 24/7.
“State Street has played a leading role in market innovation for decades, from servicing mutual funds to launching ETFs, and we’re proud to continue that role as digital assets reshape market infrastructure. 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.” – Yie-Hsin Hung, president and chief executive officer of State Street Investment Management.
What is the importance?
State Street is responsible for managing over USD 5 trillion in assets, which makes it one of the world’s leading custodians for financial institutions. Galaxy brings strong infrastructure capabilities to the crypto space, and the two firms have partnered to create a new product: a bridge between traditional financial (TradFi) and decentralized finance (DeFi) services, in other words, a fund that looks like a traditional cash management vehicle but operates on blockchain rails. Mike Novogratz, founder and CEO of Galaxy, called the SWEEP fund “what traditional finance and crypto convergence looks like in practice.”