Key Takeaways
- BNY is launching an onchain transfer agency covering $8.6T across 7.6M investor accounts.
- Blackrock and Baillie Gifford could scale tokenized funds through BNY’s $59T custody network.
- BNY will run 2 systems in parallel as institutions test blockchain settlement and compliance.
Baillie Gifford to Use BNY Platform for UK’s First Native Regulated Tokenized Fund
BNY (Bank of New York) Mellon is putting one of Wall Street’s least visible but most important functions on blockchain rails.
The world’s largest custodian plans to launch a digital version of its transfer agency business. The platform will process fund transactions and maintain records showing who owns each share. BNY will keep its traditional system running alongside the new service, according to the report by the Financial Times.
The move carries significant weight. BNY oversees more than $59 trillion in assets under custody and administration. Its transfer agency operation alone services about $8.6 trillion across 7.6 million investor accounts.
Tokenized Funds Gain Institutional Infrastructure
Transfer agents sit behind fund subscriptions, redemptions and ownership records. These processes often require several parties to maintain and reconcile separate databases.
BNY’s blockchain platform is designed to create a shared record of ownership. That could reduce duplication, shorten settlement times and support markets that operate around the clock.
Carolyn Weinberg, BNY’s chief product and innovation officer, said the technology could transform how financial markets process transactions. She described the project as bringing the records behind fund activity onchain.
Baillie Gifford is using the digital transfer agent for what it calls the UK’s first fully native, regulated tokenized fund. The Edinburgh-based investment firm manages about $262 billion (£197 billion).
Blackrock and Dreyfus, BNY’s money-market fund and cash-management business, are also expected to use the service for planned products.
BNY Chooses Evolution Over Disruption
The launch reflects Wall Street’s growing interest in tokenization. Asset managers hope blockchain can make fund shares easier to issue, transfer and settle without changing the underlying investment structure.
BNY has already worked with Goldman Sachs on a system that records ownership of selected money-market funds through blockchain-based representations. The new transfer agency extends that strategy deeper into BNY’s core infrastructure.
However, traditional financial rails are unlikely to disappear soon. BNY expects conventional and blockchain systems to operate together while institutions test security, regulation and market demand.
That measured approach may prove important. Financial firms want the efficiency of a shared ledger, but they still need established controls for custody, compliance and record-keeping.
For BNY, the goal is not to replace the fund industry overnight. It is to ensure that the bank remains at its center as ownership records move onchain.
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley, Citi Lead Strategy’s Bitcoin Banking Adoption
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup topped the newly launched Strategy Bitcoin Banking Adoption Index, which assessed…
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley, Citi Lead Strategy’s Bitcoin Banking Adoption
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup topped the newly launched Strategy Bitcoin Banking Adoption Index, which assessed…
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley, Citi Lead Strategy’s Bitcoin Banking Adoption
Fidelity, BNY, Goldman Sachs, JPMorgan, Morgan Stanley, and Citigroup topped the newly launched Strategy Bitcoin Banking Adoption Index, which assessed…
Credit: Source link