BNY Mellon Tests Tokenized Deposits

BNY Mellon is reportedly piloting tokenized deposits that would enable clients to make blockchain-based payments using digital versions of traditional funds.

The initiative aims to enable real-time, cross-border transactions across BNY Mellon’s global network. It also supports the bank’s broader strategy to modernize its payments infrastructure and advance the use of blockchain in global finance.

Tokenized deposits are digital versions of a client’s cash held at a commercial bank. When they run on blockchain infrastructure, they can be transferred and settled instantly, removing the delays and intermediaries typical of traditional payment systems.

They could also help banks overcome legacy technology limitations, enabling deposits and payments to move more efficiently within internal systems and, over time, across the wider financial market as interoperability improves.

The initiative will be led by Carl Slabicki, executive platform owner for Treasury Services at BNY Mellon, which handles around $2.5 trillion in payments each day.

This isn’t BNY Mellon’s first move into tokenization. In July, the bank partnered with Goldman Sachs on a project that used Goldman’s blockchain technology to record customers’ ownership of select money market funds.

The collaboration marked the first instance in the US where fund managers allowed subscriptions for money market fund shares through BNY Mellon’s LiquidityDirectSM and Digital Asset platforms, with ownership records mirrored via tokenization on Goldman’s GS DAP platform.

Both efforts for part of BNY Mellon’s wider blockchain strategy, which was strengthened when the bank joined more than 30 global financial institutions taking part in a SWIFT-led initiative to develop a blockchain-based shared ledger for real-time cross-border payments.