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Goldman Sachs and BNY Mellon have launched digital tokens that mirror shares of money market funds, marking a significant step in Wall Street's integration of blockchain technology into traditional finance.
The initiative enables investors to buy and sell money market fund shares on BNY's LiquidityDirect platform, with digital records of those shares created on Goldman's blockchain system. The solution digitises fund ownership whilst maintaining regulatory compliance and enables fractional shares with 24/7 trading capabilities.
The collaboration aims to enhance liquidity, transparency, and efficiency by digitizing fund settlement processes, which traditionally take one to three business days. Tokenised money market fund shares are created on Goldman's Digital Asset Platform (GS DAP) and distributed through BNY's LiquidityDirect platform, facilitating near-instant settlements.
BlackRock, BNY Investments Dreyfus, Federated Hermes, Fidelity Investments and Goldman Sachs Asset Management are among the companies participating in the initial rollout. These firms will issue tokenised versions of their money market funds, with BNY Mellon maintaining ownership records on the blockchain.
Laide Majiyagbe, BNY Mellon's Head of Liquidity, Funding, and Collateral
Laide Majiyagbe, BNY Mellon's Head of Liquidity, Funding, and Collateral, described the move as "a first step in the transition toward a digital, real-time financial architecture," emphasising scalability and security.
The initiative aligns with broader industry trends toward tokenisation, particularly following the US adoption of the GENIUS Act, which provided regulatory clarity for stablecoins. This legislative development has encouraged traditional institutions to experiment with digital assets.
Ethereum remains central to the tokenisation infrastructure, though the initiative does not introduce new tokens. Instead, it digitises access and settlement mechanisms, minimising regulatory hurdles whilst demonstrating blockchain's potential to streamline asset servicing.
The move marks an early step toward modernising the infrastructure that underpins most of the financial ecosystem. If adopted broadly, it could make it easier and faster for institutional investors to use these assets as collateral and reduce trade settlement times.
Caroline Butler, BNY Mellon's Global Head of Liquidity
Caroline Butler, BNY Mellon's Global Head of Liquidity, expressed pride in pioneering the initiative, which could reshape global asset management through blockchain-based fund settlement.
Chris Perkins, president of crypto investment firm CoinFund
Chris Perkins, president of crypto investment firm CoinFund, said: "We're at the precipice of doing something very special, and that's really the democratisation of markets."
Other asset managers are also exploring tokenisation. In January, Apollo partnered with Securitize to launch a feeder fund that would channel capital from crypto-native investors into its global credit fund. The growing interest in tokenisation coincides with renewed optimism in the crypto industry, which has rallied in recent months and gained momentum after the Genius Act was passed earlier this month.
Critics, however, say tokenisation could allow companies to bypass the guardrails put in place to protect retail investors. Companies may also not consent to having their securities tokenised. Earlier this month, OpenAI objected to Robinhood's tokens tied to its private shares.
The partnership combines Goldman's digital asset expertise with BNY's leadership in custody services, positioning both firms to capture a growing share of the $7 trillion fund market by targeting inefficiencies in asset liquidity.
