Wall Street giants set to permit investment in tokenized funds
|- Goldman Sachs and BNY Mellon have reportedly partnered to enable institutional clients to invest in tokenized funds.
- The banks have already signed up firms like BlackRock and Fidelity for the project, along with their asset management arms.
- The move adds to a growing list of financial firms that are looking to offer tokenized products to clients.
Bank of New York (BNY) Mellon and Goldman Sachs (GS) have announced a joint initiative allowing BNY clients to invest in money market funds, while storing records of ownership on the latter's blockchain solution.
BNY and Goldman Sachs team up to merge blockchain with traditional funds
Wall Street firms BNY Mellon and Goldman Sachs revealed a joint initiative to introduce blockchain technology to the traditional money market fund (MMF) sector.
The firms stated that clients of BNY Mellon will be able to invest in money market funds, while their ownership records will be stored on Goldman Sachs' DAP blockchain.
"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," said Laide Majiyagbe, Global Head of Liquidity, Financing and Collateral at BNY, in a press release on Wednesday.
The initiative will include participation from firms such as BlackRock, Fidelity Investments and Federated Hermes, alongside the asset management arms of BNY and Goldman. BNY plans to maintain responsibility for the official recordkeeping and settlement of the funds under existing regulatory frameworks, while also supporting the issuance of mirrored token representations on Goldman Sachs' DAP blockchain.
"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," said Mathew McDermott, Global Head of Digital Assets at Goldman Sachs.
JPMorgan has also been making a similar push into the tokenized market in partnership with Ondo Finance, following the recent testing of tokenized securities transfers via its blockchain division Kinexys.
Crypto exchanges, including Robinhood, Kraken, Bybit and Gemini, have also begun offering tokenized securities to their customers. The push follows President Donald Trump signing the GENIUS Act last Friday, which establishes a regulatory framework for stablecoins.
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