Goldman Sachs, BNY To Offer Tokenized Money-Market Funds For Clients

Authored by Amin Haqshanas via CoinTelegraph.com,

Wall Street giants Goldman Sachs and BNY are preparing to offer institutional investors access to tokenized money market funds, which could unlock real-time settlement, 24/7 market access and more efficiencies across capital markets.

Clients of BNY, the world’s largest custodian bank, will soon be able to invest in money market funds whose ownership is recorded directly on Goldman Sachs’ private blockchain, according to a Wednesday news release.

“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.

The initiative includes participation from industry heavyweights including BlackRock, Fidelity Investments and Federated Hermes, along with the asset management arms of Goldman and BNY, per the release.

Money market fund tokens. Source: Copper.co

Ban on interest-bearing stables to spur growth in tokenized funds

The development comes on the heels of the newly signed GENIUS Act, which established a regulatory framework for stablecoins in the US. The bill, passed last week with more than 300 House votes, bans interest-bearing stablecoins.

In contrast, tokenized money market funds offer yield, giving hedge funds, pensions and corporations a new tool to manage idle cash with minimal volatility.

In a report last month, Moody’s revealed that tokenized short-term funds have grown to $5.7 billion in assets since 2021 amid growing interest from traditional asset managers, insurers and brokerages looking to offer clients access between fiat and digital markets. 

Typically backed by US Treasurys or other low-risk instruments, these funds function like traditional money market funds but leverage blockchain to issue fractional shares and enable real-time settlement.

Race to bring capital markets on blockchain is on

Earlier this month, Robinhood CEO Vlad Tenev detailed plans for “Robinhood Chain,” an Ethereum-compatible layer 2 on Arbitrum Orbit. The blockchain will let users trade tokenized derivatives of stocks directly on the blockchain, moving asset trading outside traditional exchange hours.

In a July 4 report, Galaxy Digital said Robinhood’s tokenization move removes assets from traditional market channels and brings them onchain, directly challenging the concentrated liquidity and activity that give major TradFi exchanges like the NYSE their edge.