• Goldman Sachs and BNY Mellon now enable institutional investors to buy tokenised money market funds via Goldman’s blockchain platform.
  • Major players like BlackRock, Fidelity, and Federated Hermes have already joined the initiative.

Goldman Sachs and Bank of New York Mellon have unveiled a new initiative allowing institutional investors to purchase tokenised money market funds, CNBC has learned.

This collaboration marks a significant step in integrating blockchain into traditional finance.

Clients of BNY Mellon, the world’s largest custody bank, can now invest in money market funds with ownership recorded on Goldman’s blockchain platform.

Major asset managers, including BlackRock, Fidelity Investments, and Federated Hermes, have already joined the initiative, alongside the asset management arms of Goldman and BNY.

Beyond Stablecoins: Yield-Generating Tokens

Unlike stablecoins, which are primarily used for payments and are pegged to the U.S. dollar, tokenised money market funds offer yield to investors.

These funds are attractive for hedge funds, pension funds, and corporations as a low-risk cash management solution.

“We have created the ability for our clients to invest in tokenized money market share classes across a number of fund companies,” said Laide Majiyagbe, BNY’s global head of liquidity, financing and collateral.
“The step of tokenizing is important, because today that will enable seamless and efficient transactions, without the frictions that happen in traditional markets.”

Money market funds typically invest in short-term, low-risk instruments like Treasurys and commercial paper.

Traditionally, these funds can be redeemed within a day or two during market hours. Tokenisation, however, introduces faster settlement, round-the-clock trading, and automation.

To support the shift, BNY will maintain traditional records alongside blockchain tokens.

According to the banks, tokenised money market funds could be used as collateral across multiple financial transactions, streamlining processes and unlocking capital.

“The sheer scale of this market just offers a huge opportunity to create a lot more efficiency across the whole financial plumbing,” said Mathew McDermott, Goldman’s global head of digital assets.

Edited by Annette George