Financial Giants Pilot Tokenized Money Market Funds
Wall Street powerhouses Goldman Sachs and BNY Mellon are set to offer institutional investors access to tokenized money market funds, promising enhanced efficiency and round-the-clock market access in capital markets.
According to a Wednesday announcement, clients of BNY Mellon, the world’s largest custodian bank, will soon invest in money market funds whose ownership is recorded directly on a private blockchain managed by Goldman Sachs.
BNY Mellon’s Laide Majiyagbe highlighted the transition toward a digital architecture, stating, “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.”
The initiative involves key participants, including BlackRock, Fidelity Investments, Federated Hermes, and the respective asset management arms of Goldman Sachs and BNY Mellon.
Ban on Interest-Bearing Stables Spurs Tokenized Fund Growth
The project emerges shortly after the passage of the newly signed GENIUS Act, which establishes a regulatory framework for stablecoins in the US but prohibits interest-bearing stablecoins.
In contrast, tokenized money market funds offer yield, providing hedge funds, pension funds, and corporations with a low-volatility option to manage idle cash more efficiently.
A Moody’s report revealed that tokenized short-term funds have accumulated $5.7 billion in assets since 2021, gaining traction from traditional asset managers seeking ways to integrate fiat and digital markets.
These funds typically hold US Treasurys or other low-risk instruments. They replicate traditional money market functions but use blockchain technology to enable fractional shares and real-time settlement.
Intense Race On to Tokenize Capital Markets
This initiative is part of a broader trend. Earlier this month, Robinhood CEO Vlad Tenev unveiled plans for “Robinhood Chain,” an Ethereum-compatible layer 2 solution on Arbitrum Orbit.
The Robinhood chain aims to let users trade tokenized derivatives of stocks directly on-chain, potentially removing traditional market constraints like limited trading hours.
Galaxy Digital recently noted that Robinhood’s move removes assets from traditional channels, intensifying competition against established TradFi infrastructure.
