Partnership between BNY Mellon and Goldman Sachs for launching tokenized money market funds
In a pioneering move for the U.S. financial sector, BNY Mellon and Goldman Sachs have joined forces to improve the transferability of Money Market Fund (MMF) shares. This first-of-its-kind initiative utilises blockchain technology to tokenize these funds, enabling real-time transfers, fractional ownership, and automated compliance.
The joint venture leverages BNY Mellon's use of Goldman Sachs' Digital Asset Platform (DAP) blockchain technology to maintain official records of MMF ownership, representing shares as tokens. This tokenization facilitates mirrored record-keeping that aligns with regulatory guidelines while significantly enhancing the utility and transferability of traditional MMF shares.
By digitizing ownership on a blockchain ledger, the initiative unlocks MMF shares as collateral, enables faster settlement processes compared to legacy systems, and supports subscription for shares directly via BNY Mellon’s LiquidityDirect platform.
Key advantages of this blockchain-enabled model include fractional ownership, which broadens investor access, and automated compliance, which streamlines regulatory checks during transactions. Major asset managers such as BlackRock, Fidelity, and Federated Hermes are participating in the initiative, demonstrating broad industry support and expected widespread adoption.
Ripple’s blockchain infrastructure is also involved, bolstering settlement speeds and liquidity management within this tokenized ecosystem. The strategic collaboration between BNY Mellon and Goldman Sachs marks a significant step towards integrating traditional finance with decentralized technologies.
Laide Majiyagbe, Global Head of Liquidity, Financing and Collateral at BNY Mellon, emphasizes the importance of this initiative in shaping the future of finance. Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, expresses excitement about the strategic collaboration with BNY Mellon in their journey towards the longer-term vision for GS DAP and digital assets innovation.
BNY Mellon's role as a trusted bridge between traditional finance and emerging technologies is further highlighted by this collaboration. Fund managers can now offer MMF share subscriptions through BNY Mellon's LiquidityDirect and Digital Asset platforms, enabling investors to subscribe and redeem MMF shares seamlessly.
The use of blockchain technology in this initiative is expected to bring increased transparency and security to MMF transactions, signalling a major step towards a more digital, real-time architecture for the financial sector.
- The collaboration between BNY Mellon and Goldman Sachs utilizes Ripple's blockchain infrastructure, with BNY Mellon's LiquidityDirect platform integrating data-and-cloud-computing to offer MMF share subscriptions, thereby facilitating seamless transfers within the finance industry.
- The tokenization of Money Market Fund (MMF) shares, backed by blockchain technology, allows for real-time transfers, fractional ownership, and automated compliance in the finance sector, thereby revolutionizing the traditional MMF share ownership model and unlocking new possibilities in the data-and-cloud-computing and technology landscape.
