State Street Corporation has become the first third-party custodian to join J.P. Morgan’s Digital Debt Service, a blockchain-based platform for issuing, settling, and managing debt securities.
This collaboration allows State Street to provide custody for tokenized debt securities, leveraging J.P. Morgan’s Kinexys Digital Assets platform. The service enables seamless custody with automated settlement, including T+0 options, and smart contract-driven lifecycle management for payments and redemptions.
The inaugural transaction was a $100 million commercial paper issued by Oversea-Chinese Banking Corporation (OCBC), with State Street Investment Management as the anchor investor and J.P. Morgan Securities LLC as the placement agent. This move integrates State Street’s front, middle, and back-office operations, maintaining traditional compliance standards while modernizing short-term debt markets. The service is currently available only in the U.S.
The Digital Debt Service leverages blockchain for real-time (T+0) settlement, smart contract automation, and streamlined lifecycle management (e.g., payments and redemptions). This reduces counterparty risk and operational delays compared to traditional T+2 or longer settlement cycles, potentially lowering costs and increasing liquidity in debt markets.
Blockchain’s immutable ledger provides near real-time transparency, reducing reliance on intermediaries and enhancing trust among institutional participants. This could encourage broader adoption of tokenized debt instruments. State Street’s participation as the first third-party custodian signals growing confidence among major financial institutions in blockchain technology.
As a custodian managing $49 trillion in assets, State Street’s involvement could catalyze other institutions to explore tokenized debt, expanding the ecosystem. The collaboration maintains traditional compliance standards, making it easier for institutional clients to adopt blockchain without overhauling existing servicing models.
This balance could accelerate the mainstream integration of digital assets in fixed-income markets. The tokenized real-world asset (RWA) market, excluding stablecoins, has grown 65% in 2025 to $26.4 billion, with projections ranging from $2 trillion by 2030 (McKinsey) to $19 trillion by 2033 (Ripple/BCG).
This partnership positions State Street and J.P. Morgan to capture a significant share of this expanding market. The deal sets a precedent for tokenized debt issuance, potentially encouraging other issuers and custodians to join, which could scale the volume of onchain debt instruments.
State Street’s focus on managing digital wallets onchain and fostering interoperability across blockchain networks could create a more connected digital asset ecosystem. This is critical for scaling tokenized debt markets globally, though the service is currently U.S.-only.
Partnerships like J.P. Morgan’s with Chainlink and Ondo Finance for cross-chain transfers suggest future potential for integrating tokenized debt across different blockchain platforms, enhancing market accessibility. By automating processes like interest payments and redemptions via smart contracts,
The platform reduces administrative costs and manual errors, potentially lowering the cost of issuing and managing debt. Reduced counterparty risk and faster settlements could enhance capital velocity, as noted by Chainlink’s Sergey Nazarov, potentially boosting economic activity by making capital more readily available.
Basis for Onchain Debt-to-GDP Ratio
An onchain debt-to-GDP ratio would measure the total value of tokenized debt securities (recorded on blockchain) relative to a country’s or region’s gross domestic product (GDP). The State Street and J.P. Morgan collaboration lays groundwork for this metric in the following ways:
Blockchain’s transparent ledger allows precise tracking of tokenized debt issuance, settlement, and lifecycle events in real time. State Street’s custody of tokenized debt in digital wallets on J.P. Morgan’s Kinexys platform provides a verifiable record of debt instruments, enabling accurate measurement of onchain debt.
The collaboration establishes a framework for institutional-grade tokenized debt, which could standardize how debt is issued and recorded onchain. This is critical for aggregating data across issuers to calculate a comprehensive onchain debt total. The $100 million OCBC commercial paper transaction demonstrates the feasibility of large-scale tokenized debt issuance.
As more institutions adopt similar platforms, the volume of onchain debt could grow significantly, providing enough data to make an onchain debt-to-GDP ratio meaningful. To calculate an onchain debt-to-GDP ratio, tokenized debt data must be paired with GDP figures.
The collaboration’s focus on institutional clients and regulatory compliance ensures that tokenized debt aligns with traditional financial reporting standards, facilitating integration with national GDP data from sources like the Congressional Budget Office (CBO), which projects U.S. federal debt at 122% of GDP by 2034.
As tokenized debt grows, it could represent a significant portion of total debt, allowing analysts to compare onchain debt to GDP as a subset of broader debt metrics, highlighting blockchain’s role in debt markets. Higher debt-to-GDP ratios, whether traditional or onchain, raise concerns about fiscal sustainability.
State Street’s own research notes that rising U.S. debt-to-GDP ratios reduce the convenience yield of Treasuries, reflecting investor concerns. An onchain debt-to-GDP ratio could provide insights into how tokenized debt contributes to or mitigates these risks.
Tokenized debt’s faster settlement and lower costs could increase capital velocity, potentially boosting GDP growth. This dynamic could make an onchain debt-to-GDP ratio a useful indicator of blockchain’s economic impact. The Digital Debt Service is currently U.S.-only, limiting the initial scope of onchain debt to one market.
Global adoption would be needed for a comprehensive ratio, especially since GDP is typically measured nationally or regionally. Not all debt is tokenized, so an onchain debt-to-GDP ratio would initially represent only a fraction of total debt. For context, global sovereign debt is 110% of GDP for advanced economies, but tokenized debt is a small subset.
It lays a foundation for an onchain debt-to-GDP ratio by providing a scalable, transparent framework for tracking tokenized debt. However, the ratio’s relevance depends on broader adoption, global expansion, and integration with traditional economic metrics.
While the deal enhances the infrastructure for measuring onchain debt, its impact on the broader debt-to-GDP ratio will depend on how quickly tokenized debt grows relative to GDP and whether it influences overall debt issuance trends.
