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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