Goldman Sachs, BNY Mellon to offer tokenized money market funds for clients

2025-07-28

Goldman Sachs, BNY Mellon to Offer Tokenized Money Market Funds for Clients

In a major step forward for the intersection of traditional finance and blockchain, banking giants Goldman Sachs and BNY Mellon have announced they will soon enable institutional clients to access tokenized money market funds. This initiative will provide 24/7 settlement and real-time, blockchain-based tracking of fund ownership—ushering in a new era of efficiency and transparency for one of the world's most important financial instruments.

Why It Matters

Money market funds are a cornerstone of the financial system, with trillions of dollars in assets under management worldwide. They provide liquidity, safety, and modest returns for institutional treasurers, asset managers, and high-net-worth individuals. However, the mechanics of trading, settling, and tracking these funds remain rooted in legacy systems that are not always as timely or transparent as today's financial landscape demands.

By leveraging blockchain technology to tokenize money market funds, Goldman Sachs and BNY Mellon are not just upgrading the plumbing of finance—they're laying the groundwork for a more accessible, transparent, and interoperable ecosystem. Tokenization promises to compress settlement times from days to seconds, allow for around-the-clock trading, and provide clients with granular, real-time visibility into their holdings.

In a world where liquidity and operational efficiency are paramount, these improvements could unlock significant advantages for institutional clients and, eventually, the broader market.

Technical Breakdown

At the heart of this initiative is the process of tokenization—the conversion of traditional financial assets into digital tokens recorded on a blockchain. In this case, shares of money market funds will be represented as digital tokens. These tokens exist on a private, permissioned blockchain built under the auspices of the Citi-led Regulated Liability Network (RLN) initiative. The RLN is a consortium designed to modernize financial market infrastructure using blockchain while ensuring compliance and regulatory oversight.

Key Features:

  • 24/7 Settlement: Traditional money market fund trades often settle on a T+1 or even T+2 basis (trade date plus one or two days), and only during business hours. Tokenized funds, by contrast, can settle instantly at any time, providing unmatched flexibility and reducing counterparty risk.

  • Blockchain-Based Ownership Tracking: Every transaction and ownership change is recorded on the blockchain, creating a tamper-proof audit trail. This real-time visibility is especially attractive for institutional clients managing large, complex portfolios.

  • Programmability: Tokenized assets can be integrated into smart contracts, enabling features like automated compliance checks, instant collateralization, or workflow automation—paving the way for entirely new financial products and services.

  • Interoperability: By building on industry-wide initiatives like the RLN, these tokenized funds can more easily interact with other tokenized assets, digital currencies, and payment rails, creating a seamless ecosystem for digital finance.

According to reports, this service will first be offered to select institutional clients, including asset managers, hedge funds, and corporate treasurers—groups that already rely on money market funds for daily liquidity management.

What’s Next

The launch of tokenized money market funds is more than just a pilot project—it's a signal that some of the world’s most influential financial institutions believe blockchain is ready for prime time.

Expectations are high that other major banks and fund managers will follow suit, expanding the range of tokenized assets to include everything from equities and bonds to real estate and alternative investments. As the blockchain rails mature, we may see the emergence of a fully tokenized financial market, where everything from cash to complex derivative products can be issued, traded, and settled in real time, 24/7.

Regulatory clarity will be key to scaling these efforts. Both Goldman Sachs and BNY Mellon are part of industry and regulatory working groups, ensuring that these products meet the highest standards of compliance, transparency, and investor protection.

For institutional clients, the near future could bring:

  • Increased Liquidity: Real-time settlement and 24/7 access mean money can be moved and redeployed more efficiently.
  • Operational Cost Savings: Automated processes and reduced reliance on intermediaries can lower transaction and reconciliation costs.
  • Enhanced Risk Management: Real-time tracking and faster settlement minimize exposure to counterparty and settlement risks.

If successful, these advances could ultimately trickle down to retail investors, offering everyone access to faster, cheaper, and more transparent financial products.

Conclusion

The move by Goldman Sachs and BNY Mellon to offer tokenized money market funds marks a pivotal moment in financial innovation. By combining the stability of traditional assets with the agility of blockchain technology, these institutions are charting a path toward a more efficient, transparent, and inclusive financial ecosystem. As regulatory frameworks evolve and more participants join the movement, the era of tokenized finance appears not just possible, but inevitable.

Source:
Goldman Sachs, BNY Mellon to offer tokenized money market funds for clients (Cointelegraph)