Goldman Sachs and BNY Mellon are preparing to roll out tokenized money market funds for institutional investors, as Wall Street steps further into blockchain-based finance.
Clients of BNY, the world’s largest custodian bank, will soon be able to invest in money market funds recorded directly on Goldman’s private blockchain, the firms said Wednesday. The new system promises faster settlement, broader market access, and potentially lower back-office costs.
“As the financial system moves toward a real-time digital structure, we’re focused on building scalable, secure tools for clients,” said Laide Majiyagbe, BNY’s global head of liquidity, financing and collateral.
The effort involves a number of heavyweight asset managers, including BlackRock, Fidelity, and Federated Hermes, as well as the investment arms of Goldman and BNY.
Unlike stablecoins, which are often banned from offering interest under new U.S. rules, tokenized money market funds provide yield. That makes them attractive to hedge funds, pensions, and corporates looking to park cash without giving up returns.
The push follows the recent passage of the GENIUS Act, which set new rules for stablecoins and banned interest-bearing versions. That’s likely to further accelerate interest in tokenized alternatives like these funds, which are typically backed by Treasurys or other low-risk assets.
Moody’s reported last month that tokenized short-term funds have reached $5.7 billion in assets since 2021, with asset managers and brokerages offering clients faster access between fiat and digital markets.
The race to put capital markets on blockchain is heating up. Robinhood recently unveiled plans for its own Ethereum-compatible chain that would allow around-the-clock trading of tokenized stock derivatives — a move seen as a challenge to the NYSE and other legacy venues.
That said, Citadel Securities has urged U.S. regulators to slow down on efforts to expand trading of tokenized securities, warning that the move could rattle equity markets and confuse investors.
In a letter to the SEC’s Crypto Task Force, the market-making giant raised concerns about allowing blockchain-based assets to gain ground without clear regulatory guardrails. Tokenized securities — which can be traded around the clock, settled faster, and broken into fractional shares — are gaining traction, with platforms like Gemini, Robinhood, and Backed Finance rolling out offerings.
Citadel argued that without proper oversight, tokenized products could pull trading activity away from public markets and into fragmented liquidity pools that traditional institutions, such as pension funds or endowments, may struggle to access.
