With this initiative, the bank aims to support programmable, on-chain cash for institutional market infrastructure, BNY said in a Friday (Jan. 9) press release.
Several financial institutions and digital natives are participating in the project, according to the release.
In the future, BNY aims to support rules-based, near real-time cash movements, saying in the release that this will reduce settlement friction, enhance liquidity and boost operational efficiency for its institutional clients.
Carolyn Weinberg, chief product and innovation officer at BNY, said in the release that with innovations like this, the bank is supporting the move of institutional markets toward always-on operating models.
“Tokenized deposits provide us with the opportunity to extend our trusted bank deposits onto digital rails, enabling clients to operate with greater speed across collateral, margin and payments, within a framework built for scale, resilience and regulatory alignment,” Weinberg said.
In another project in the space, BNY said in July that it partnered with Goldman Sachs to bring traditional financial instruments like money market funds onto blockchain infrastructure.
PYMNTS reported at the time that this collaboration will enable BNY’s clients, primarily institutional treasurers managing tens of billions of dollars in working capital, to hold money market fund shares in tokenized form, enabling near-instantaneous transfers and potential atomic settlement alongside other tokenized assets.
In November, BNY introduced a money market fund designed to promote digital asset adoption in the liquidity space. The bank said the Dreyfus Stablecoin Reserves Fund will hold the reserves for stablecoins to be issued under the GENIUS Act but will not invest in stablecoins.
In July, blockchain company Ripple chose BNY for the primary custody of its stablecoin reserves. BNY said at the time that this partnership expands on the bank’s record of providing end-to-end services across stablecoin infrastructure and extends its efforts for further interoperability between stablecoins and traditional assets.
“Ripple and BNY are jointly committed to paving the way for digital asset adoption at institutional scale and together are bridging the gap between the traditional finance and crypto ecosystems,” the bank said at the time in a press release.