Institutional investors may soon have a new way to park their cash. Goldman Sachs and Bank of New York Mellon have teamed up to offer tokenised money market funds – letting clients buy shares in these funds and track ownership using blockchain technology.
BNY Mellon clients will be able to invest in money market funds with ownership recorded on Goldman’s private blockchain. Major asset managers like BlackRock, Fidelity, and Federated Hermes are already onboard, along with the asset management arms of both banks.
The move comes shortly after President Trump signed the GENIUS Act, a law that supports US-regulated stablecoins. That’s fueled more interest in digital assets – and the big banks are betting that tokenised money market funds could be the next step. Unlike stablecoins, tokenised funds offer a return, which could make them more appealing for hedge funds, pensions, and large firms managing short-term cash.
“We have created the ability for our clients to invest in tokenised money market share classes in a number of fund companies,” said Laide Majiyagbe, BNY’s global head of liquidity, financing and collateral. “The step of tokenising is important, because today that will enable seamless and efficient transactions, without the frictions that happen in traditional markets.”
Money market funds typically invest in safe, short-term assets like US Treasuries, commercial paper, or repurchase agreements. They’re known for being low-risk and easy to redeem – usually in a day or two. Since the Fed started raising interest rates in 2022, investors have poured around $2.5 trillion into the asset class.
Now, with tokenisation, Goldman and BNY are adding new capabilities. The token acts as a digital certificate of ownership on a blockchain. That could mean faster settlements, 24/7 trading, and less reliance on market hours. For now, BNY will continue keeping traditional records alongside the new tokens to help ease the shift.
The bigger idea is to build a system where tokenised assets can move freely and quickly without needing to cash out every time. That could change how large financial players manage collateral and execute trades, potentially saving time and capital.
Mathew McDermott, Goldman’s global head of digital assets, said it opens the door to new efficiencies. “Instead of investors and corporations selling money market funds to deliver cash collateral for a trade, they could just exchange the token,” he explained.
He added, “The sheer scale of this market just offers a huge opportunity to create a lot more efficiency in the whole financial plumbing.”
(Photo by Traxer)
See also: The GENIUS Act: Does America’s new stablecoin framework create more problems than it solves?
