Key Points
- Goldman Sachs and BNY Mellon are launching a platform for institutional investors to buy tokenized money market funds.
- Unlike stablecoins, these new tokenized funds will pay investors a yield.
- Major players, including BlackRock and Fidelity, have already signed on to use the platform.
- Placing the funds on a blockchain enables faster, 24/7 trading and settlement.
Goldman Sachs and Bank of New York Mellon are set to announce a new platform that will allow their institutional clients to buy “tokenized” money market funds. This means the ownership of these funds will be recorded on Goldman’s private blockchain.
The project has already signed up some of the biggest names in finance, including BlackRock, Fidelity, and Federated Hermes. This move is seen as the next major leap for digital assets on Wall Street, coming just after President Donald Trump signed a new law regulating stablecoins.
While several big banks are exploring stablecoins for payments, these new tokenized money market funds have a key advantage: they pay a yield. This makes them an attractive destination for large investors, such as hedge funds and corporations, to park their capital.
By creating digital ownership records on a blockchain, banks claim they can process transactions faster, more efficiently, and with 24/7 availability. This eliminates the “friction” found in traditional markets, where settling trades can take a day or two and are limited to market hours.
However, the long-term vision is even more ambitious. The banks believe these tokenized funds could eventually be used directly as collateral for other financial trades.
Instead of selling a money market fund to get cash for a trade, an investor could simply exchange the token. This would free up huge amounts of time and capital, making the entire financial system’s “plumbing” more efficient.
