In a bold move that could reshape how Wall Street handles money market funds, BNY Mellon and Goldman Sachs have joined forces to tokenize these traditional investments. The partnership marks the first time in the US that money market fund shares can be subscribed through BNY’s platforms and mirrored as tokens on Goldman’s blockchain. Pretty groundbreaking stuff for the stuffy world of finance.
The initiative leverages Goldman Sachs’ GS DAP blockchain to record ownership of fund shares. Major players are already on board – BlackRock, Fidelity, Federated Hermes, BNY Investments Dreyfus, and Goldman Sachs Asset Management. They’re not messing around with small-time experiments here. Unlike traditional decentralized exchanges, this system maintains strict regulatory compliance and institutional oversight.
So how does it work? Simple. Clients use BNY’s LiquidityDirect platform to access and transact with MMFs, while the tokenized shares get managed through BNY’s Digital Assets platform. The blockchain serves as the immutable ledger. The tokens mirror actual fund shares, with BNY keeping the official records. No cutting corners on compliance.
This isn’t for everyday Joes. The service targets institutional investors like hedge funds, pensions, and corporations. These big players have been itching for digital asset infrastructure that doesn’t force them to venture into crypto-native territory. Now they’ve got it.
The timing couldn’t be better. With the GENIUS Act banning interest-bearing stablecoins in the US, tokenized MMFs offer a compliant alternative that still generates yield. This innovative approach also enables seamless transferability of MMF shares between participants. The technology utilizes Digital Assets Canton blockchain technology for secure and scalable operations. Smart move.
The partners aim to eventually enable real-time, 24/7 settlement and enhance collateral mobility. Imagine transferring millions instantly, regardless of banking hours. Game changer.
Moody’s reports tokenized short-term fund assets have already reached $5.7 billion since 2021. That’s just the beginning. This partnership could accelerate the financial system’s digital transformation substantially.
Wall Street dinosaurs are finally adapting. Who would’ve thought BNY Mellon – founded in 1784 – would be at the forefront of financial innovation? Times change. Even bankers evolve. Sometimes.
