Goldman Sachs and Bank of New York Mellon have announced a new platform for tokenizing shares of money market funds. This service will allow institutional clients to invest in tokens that represent ownership of fund shares.
Launch of Blockchain-Based Platform
Goldman Sachs and BNY Mellon have revealed a new platform for recording tokenized shares of money market funds on the blockchain. Institutional clients will see their stakes reflected as digital tokens on Goldman’s ledger while BNY Mellon continues to log traditional entries. This framework aims to blend familiar processes with new technology, enabling large investors to explore digital channels without abandoning existing systems.
Benefits of Tokenized Shares
Tokenized versions of these money market fund shares will pay interest and trade on a 24-hour network, appealing particularly to hedge funds and pension managers. These funds invest in short-term government bills and other securities, and since the Federal Reserve began raising rates in 2022, they have attracted about $2.5 trillion in inflows. 'We have created the ability for our clients to invest in tokenized money market share classes,' said Laide Majiyagbe, BNY's head of liquidity.
Potential to Transform Financial Infrastructure
The platform also promises faster collateral transfers. Currently, traders must sell fund shares, wait for settlement, and then move cash. Under the tokenized model, they can transfer tokens instantly at any time of the day. Mathew McDermott, head of digital assets at Goldman Sachs, noted, 'this is a chance to create real utility in an area that lacked it.'
The system of tokenized money market funds could significantly reshape how institutional investors handle large cash positions, reducing settlement times and providing consistent access beyond standard market hours.
