BNY Mellon launches blockchain system for $8.6 trillion fund business

BNY Mellon is launching a blockchain-based system for its $8.6 trillion transfer agency business, aiming to create a single on-chain ownership ledger and reduce intermediaries. Initial clients including Baillie Gifford and BlackRock will use the platform for tokenized funds. The move is part of a wider Wall Street shift to tokenization, though BNY expects traditional systems to coexist for years due to cyber and smart-contract risks.

Blockchain transfer agency launch

• ▪BNY Mellon is launching a blockchain-based system for its transfer agency business.
• ▪The bank's transfer agency business services approximately $8.6 trillion in assets across 7.6 million accounts.
• ▪The new system aims to create a single on-chain record of ownership, reducing the need for intermediaries and costly reconciliation.
• ▪BNY Mellon has over $59 trillion in total assets under custody and administration.

Initial client adoption

• ▪Baillie Gifford will use the service for what is described as the first fully native U.K.-regulated tokenized fund.
• ▪Initial clients for the blockchain service include Baillie Gifford, BlackRock, and BNY Mellon’s Dreyfus unit.
• ▪BlackRock and Dreyfus are expected to use the new system for other planned tokenized funds.

Traditional system coexistence

• ▪BNY Mellon acknowledges that blockchain technology introduces cyber risks, including bugs in smart contracts and network bridges.
• ▪BNY Mellon expects its traditional transfer agency system to coexist with the new blockchain platform for years.
• ▪Emily Portney, BNY's head of asset servicing, stated that trillions of dollars in funds will remain on existing traditional systems.

Wall Street tokenization infrastructure

• ▪The banks' shared network is intended to protect their deposits from the threat posed by stablecoins.
• ▪Edwin Mata, CEO of tokenization platform Brickken, predicts that Wall Street will operate entirely on blockchain technology by 2030.
• ▪Asset managers such as BlackRock and Franklin Templeton have already launched tokenized money-market funds in recent years.
• ▪Major U.S. banks like JPMorgan, Citi, and Bank of America plan to build a shared, tokenized deposit network by the first half of 2027.

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