U.S. financial giants took a significant step toward digitizing traditional financial instruments by launching infrastructure for tokenizing shares of money market funds (MMF).
Bank of New York Mellon Corporation (BNY Mellon) and Goldman Sachs Group, Inc., two of the largest investment banks in the U.S., announced the launch of a solution aimed at expanding and simplifying American institutional investors’ access to the tokenized asset market.
As part of the initiative, BNY Mellon will maintain the ownership registry of clients’ money market fund shares on Goldman Sachs’ blockchain. The mechanism envisions subscription and redemption of MMF shares through the LiquidityDirect platform, integrated with BNY Mellon’s digital asset system. At the same time, mirror tokens of MMF shares will be created on GS DAP®, Goldman Sachs Digital Assets’ platform.
This will enable investors to access more flexible trading and accounting of their assets without changing the legal status or regulatory structure of the funds.
In the initial phase, leading asset managers including BlackRock, Dreyfus (BNY Investments), Federated Hermes, Fidelity Investments, and Goldman Sachs Asset Management will participate.
Laide Majiyagbe, Global Head of Liquidity, Financing, and Collateral at BNY Mellon, stated that mirror tokenization of MMF shares is a first step toward a digital and more agile financial architecture. She also noted that BNY Mellon will continue to officially handle accounting, documentation, and settlements for the funds while supporting token issuance on GS DAP® to further scale the solution globally. Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, emphasized that tokenizing MMF shares will allow their use as collateral and improve liquidity by simplifying transfers between parties.
The project reflects growing interest from major financial institutions in tokenizing traditional instruments. Earlier, JPMorgan began testing tokenization of bank deposits on the Base blockchain, Citi is building infrastructure for tokenizing private market assets, and the Bank for International Settlements (BIS), World Bank, and Swiss National Bank (SNB) tested tokenization of promissory notes.
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