Goldman Sachs BNY Mellon Launch Tokenized Money Market Funds via Blockchain for $7.1T Sector

Goldman Sachs and BNY Mellon have launched a tokenized money market fund for institutional investors, enabling clients to invest in digital tokens representing ownership in these funds via a blockchain platform. This collaboration, announced by CNBC, marks a strategic integration of blockchain technology into traditional asset management, leveraging BNY Mellon’s custodial expertise and Goldman Sachs’ digital infrastructure. The initiative allows for real-time settlement and liquidity management, addressing inefficiencies in the $7.1 trillion U.S. money market fund industry [1].

The project has drawn participation from major asset managers, including BlackRock, Fidelity Investments, and Federated Hermes, signaling industry-wide support for tokenization. Executives from both firms emphasized that this development aligns with the regulatory momentum created by the GENIUS Act, a recent U.S. law promoting the use of stablecoins. By tokenizing money market funds, the banks aim to offer institutional clients a yield-generating alternative to cash holdings, distinct from stablecoins that typically lack returns [1].

This move reflects broader trends in financial infrastructure modernization. Tokenization has the potential to reduce settlement times from days to near-instantaneous transfers, lowering counterparty risk and operational costs. For institutional investors, the shift could democratize access to liquidity tools previously dominated by large players, while enhancing transparency in asset management. BNY Mellon’s role as the world’s largest custodian bank amplifies the initiative’s credibility, as it positions the firm to manage digital token custody for a broader client base [1].

However, challenges remain. Regulatory frameworks for tokenized assets are still evolving, and cross-border transactions require standardized governance structures. Additionally, while tokenized money market funds offer yield, their adoption hinges on demonstrating tangible cost savings compared to traditional models. The initiative also faces competition from other banks exploring stablecoin applications in payments, such as JPMorgan Chase and Bank of America, which have signaled their intent to expand digital currency use cases [1].

Goldman Sachs and BNY Mellon’s collaboration underscores their commitment to fintech innovation. Both institutions have previously engaged in blockchain projects—Goldman Sachs in crypto custody services and BNY Mellon in partnerships with Cantor Fitzgerald—positioning them to shape the future of digital asset markets. For clients, the tokenized offering represents a shift toward dynamic portfolio management tools, particularly as demand for real-time analytics and programmable liquidity grows [2].

The success of this initiative will depend on adoption rates and the ability to scale operations in a highly regulated environment. If tokenized money market funds gain traction, they could redefine asset management practices, offering institutional investors a flexible, efficient alternative to conventional cash parking strategies.

Source:

[1] [Goldman Sachs, BNY introduce money market fund digital tokens]

https://www.cnbc.com/2025/07/23/goldman-sachs-bny-money-market-fund-digital-tokens.html

[2] [Citi, BNY Mellon, and Goldman Sachs rally behind Canton]

https://www.thisweekinfintech.com/page/2/