.png){kind=logo}
Goldman Sachs and BNY Mellon have announced a major initiative to provide institutional investors with access to tokenized money market funds. It allows 24/7 settlement and blockchain-based ownership tracking. The partnership, which was announced on Wednesday marks a major shift as Wall Street moves deeper into blockchain-powered financial products.
Under the new program, clients of BNY Mellon, the world’s largest custodian bank, will soon be able to invest in money market funds whose ownership is tracked directly on Goldman Sachs’ private blockchain. The offering will enable institutional clients, including hedge funds, pensions, and corporations, to acquire tokenized shares of funds. Transactions will be performed more efficiently bringing 24/7 access to the market.
This solution leverages GS DAP®, a technology platform developed by Goldman Sachs Digital Assets, which creates mirror tokens representing the value of money market fund shares. BNY Mellon’s LiquidityDirectSM platform integrates with GS DAP®, enabling seamless subscription and redemption of tokenized shares.
Laide Majiyagbe, BNY’s Global Head of Liquidity, Financing and Collateral, explained, “As the financial system transitions toward a more digital, real-time architecture, BNY is committed to enabling scalable and secure solutions that shape the future of finance.”
The launch will feature BlackRock, Fidelity Investments, Federated Hermes, and the asset management divisions of Goldman Sachs and BNY Mellon, all of which will participate in the launch, highlighting robust industry support. The decision follows the recent passage of the GENIUS Act, which bans interest-bearing stablecoins but also creates a framework for digital assets in the US.
Unlike stablecoins, tokenized money market funds offer yield, providing institutional investors with a low-volatility, on-chain option for managing idle cash. Moody’s reported last month that assets in tokenized short-term funds have surged to $5.7 billion since 2021, as traditional asset managers and brokerages seek new digital solutions for clients.
Typically backed by US Treasurys or similar low-risk instruments, these tokenized funds offer the familiar security of traditional money market funds, combined with the efficiencies and transparency of blockchain settlement.
Also Read: Ethereum’s New Privacy Features: Is a Shift in Blockchain Transparency?
The launch will follow a March 2024 network test on Digital Assets Canton Network, in which Goldman Sachs, BNY Mellon, and other financial giants participated. The asset managers, banks, custodians, and exchanges participating in that pilot demonstrated the capabilities of enterprise blockchain in mitigating risks and capitalization inefficiency.
Mathew McDermott, Goldman Sachs’ Global Head of Digital Assets, stated, “Using tokens representing the value of shares of Money Market Funds on GS DAP® would enable us to unlock their utility as a form of collateral and open up more seamless transferability in the future.”
The initiative underscores a broader industry trend as financial leaders strive to integrate capital markets into blockchain infrastructure, creating new opportunities for efficiency, transparency, and continuous trading in traditional finance.
