BNY Mellon and Goldman Sachs Launch Blockchain-Driven Tokenization of $7.07T Money Market Funds

BNY Mellon and Goldman Sachs have launched a groundbreaking initiative to tokenize money market funds (MMFs) using blockchain technology, targeting the $7.07 trillion U.S. fund market as of July 2025. The collaboration, announced on July 23, leverages Goldman Sachs’ proprietary blockchain (GS DAP) and BNY Mellon’s LiquidityDirect platform to create digital representations of MMF shares. This marks the first time in the U.S. that fund managers have enabled subscriptions for MMF shares via digital asset platforms while maintaining compliance with existing custody and settlement frameworks [1].

The initiative allows institutional clients to subscribe to and redeem MMF shares digitally, with BNY Mellon overseeing custody and regulatory compliance. Participants include BlackRock, Fidelity Investments, Federated Hermes, and Goldman Sachs Asset Management. By issuing mirrored tokens on GS DAP, the firms aim to enhance liquidity and streamline capital markets by enabling real-time, programmable asset transfers. Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, emphasized the potential for tokens to unlock MMF shares as collateral and facilitate seamless transfers [1].

BNY Mellon’s Laide Majiyagbe highlighted the project as a foundational step in modernizing financial infrastructure. The integration of GS DAP into BNY’s custody systems addresses challenges like collateral mobility and cross-platform interoperability. Meanwhile, BNY Mellon recently expanded its digital asset custody capabilities by partnering with Ripple, managing reserves for the RLUSD stablecoin to support cross-border payments [1].

The move reflects broader industry momentum toward tokenization, driven by the need to reduce settlement times, lower transaction costs, and attract investors familiar with digital efficiency. Goldman Sachs, which launched a tokenized securities trading desk earlier this year, and BNY Mellon, a global custodian since 2023, are positioning themselves at the forefront of this shift. However, operational and regulatory hurdles remain, including standardizing protocols across jurisdictions and ensuring compatibility with legacy systems [1].

Analysts note the $7 trillion fund market represents a critical opportunity for innovation. Tokenization could democratize access to traditionally exclusive assets by enabling fractional ownership, though adoption will depend on robust cybersecurity and transparent governance. The partnership’s success could set a precedent for how asset managers and custodians integrate blockchain into core operations. Regulatory bodies like the U.S. SEC and ESMA have signaled openness to innovation, provided risks such as market integrity and investor protection are addressed [1].

Sources: [1] [BNY Mellon and Goldman Sachs Target $7T Fund Market With Digital Asset Tokenization] [https://news.bitcoin.com/bny-mellon-and-goldman-sachs-target-7t-fund-market-with-digital-asset-tokenization/]