US Money Market Fund Trading Initiated by Goldman Sachs and BNY Through Tokenization
In a significant step towards digitizing traditional finance, Goldman Sachs and BNY Mellon have collaborated to launch the first tokenized money market fund solution in the United States. This initiative aims to unlock new collateral capabilities and improve transferability for the $6 trillion US money market fund industry.
The partnership positions BNY Mellon as a bridge between traditional finance and emerging blockchain technology. The success of this pilot could accelerate similar tokenization efforts across other traditional financial products.
Money market funds, with their stable value, high liquidity, and critical role in institutional cash management, represent an ideal starting point for tokenization. The tokenization approach addresses a fundamental inefficiency in institutional finance: the cumbersome process of moving money market fund shares as collateral.
Traditional settlement can take days and require extensive documentation. In contrast, tokenized versions promise near-instantaneous transfers with programmable compliance features. Goldman Sachs and BNY Mellon's collaboration maintains existing regulatory frameworks while creating a more efficient blockchain representation for money market fund shares.
The initiative involves BNY Mellon's LiquidityDirect platform and Goldman's GS DAP blockchain network. BNY Mellon continues to act as fund administrator while Goldman provides the blockchain technology for enhanced functionality.
Five major asset managers are participating in the initial launch: BlackRock, BNY Investments Dreyfus, Federated Hermes, Fidelity Investments, and Goldman Sachs Asset Management. Goldman's GS DAP platform, built using technology from Digital Asset, marks its first deployment in the US market.
The hybrid approach, called 'mirrored tokenization,' allows institutions to benefit from tokenization without abandoning established compliance structures. BNY's executive, Laide Majiyagbe, emphasizes the bank's commitment to enabling scalable and secure solutions that shape the future of finance.
Future expansion plans suggest the initiative could extend globally as regulatory frameworks evolve, potentially creating standardized tokenized fund structures across multiple jurisdictions. Goldman Sachs frames the initiative as part of broader objectives to improve collateral mobility in capital markets by enabling on-chain asset delivery with greater precision and efficiency.
While the further upcoming partners for the global expansion of the tokenization project by Goldman Sachs and BNY Mellon have not been explicitly named, Ripple has partnered with BNY Mellon as a primary custodian for the reserves backing the Ripple USD stablecoin, and has other partnerships such as with BBVA in Spain and Ctrl Alt in Dubai to support tokenization initiatives. No specific partners for Goldman Sachs’s global tokenization expansion are listed.
This collaboration is a testament to the growing recognition that tokenization represents an evolutionary rather than disruptive change to existing fund structures. As traditional financial institutions face increasing pressure to digitize operations amid growing competition from cryptocurrency-native firms, partnerships like this could pave the way for a more efficient and modern financial system.
Read also:
- Ford Discontinues Popular Top-Seller in Staggering Shift, Labeled as a "Model T Event"
- 2025 Witnesses a 27% Surge in Worldwide Electric Vehicle Sales, Despite Opposition to Electrification Policies in the U.S.
- Recorded surge in electric vehicle registrations during the initial half of the year
- Dubai-bound: Omega Seiki Mobility, an electric vehicle company from India, prepares for assembly establishment
