BNY Mellon Launches Tokenized Deposit Service on Blockchain

BNY Mellon launches tokenized deposits enabling faster settlement, improved liquidity, and regulated blockchain payments for major institutional clients worldwide.

Bank of New York Mellon has launched a tokenized deposit service using blockchain infrastructure. As a result, institutional clients can transfer bank deposits on digital rails. Moreover, the service supports payment support, use of collateral, and margin transactions.

BNY Mellon Brings Bank Deposits Onto Blockchain Rails

According to Bloomberg, BNY Mellon said the service is a representation of existing client deposits held by the bank. As a result of this, no new money issuance happens through the platform. Instead, digital representations of deposits are sent onto-chain.

The custodian, which holds $57.8 trillion in assets, has developed the service based on a private blockchain. Furthermore, the network is a permissioned model controlled by BNY Mellon. Therefore, access is still limited to approved institutional participants.

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According to the bank, tokenized deposits enable near real-time settlement in collateral transactions. Additionally, the margin movements become more efficient through the automated processing of blockchain. As a result, liquidity management is improved through trading and financing operations.

Carolyn Weinberg, Chief Product and Innovation Officer, explained the strategy very well. She said the service brings trusted bank deposits on digital rails. Moreover, she emphasized that regulatory alignment is still at the center of the design.

Early participants include Intercontinental Exchange, Citadel Securities, Anchorage Digital, and DRW Holdings. In addition, Circle, Ripple Prime, Baillie Gifford, WisdomTree, and Zero Hash also joined the rollout. Consequently, the adoption of trading firms, asset managers, and digital assets platforms is a worldwide commercial spread.

The tokenized deposits reflect client balances already registered in the BNY systems. Therefore, the interest payments can proceed normally. Unlike stablecoins, these deposits are kept within the banking framework. As a result, they avoid the risks associated with outsourcing the issuance of tokens or leaving reserves unknown.

Tokenized Deposits Signal Infrastructure Shift in Traditional Finance

BNY Mellon’s launch comes after similar blockchain undertakings from JPMorgan Chase and HSBC. Consequently, traditional finance firms are bringing legacy settlement infrastructure into the future. This shift is in reaction to the institutional demand for speed, transparency, and operational efficiency in global markets.

The service works with existing banking systems without standardising record-keeping. Therefore, regulatory reporting and audit requirements are not different. Meanwhile, blockchain rails help boost the visibility and automation of transactions.

The launch also comes on the heels of the passage of the GENIUS Act in the United States. The legislation set up federal frameworks for digital assets such as stablecoins. As such, there is now more regulatory clarity regarding financial services based on blockchain technology.

Tokenized deposits are designed to lower settlement friction across collateral and margin flows. Besides, programmable features enable automatic transfers if predefined conditions are met. Therefore, financial operations become more efficient and predictable.

Industry analysts say tokenized deposits are fundamentally different from stablecoins. Notably, they continue to be liabilities of regulated banks. As a result, they enjoy the protections, supervision, and interest structures that are already in place.

Overall, BNY Mellon’s initiative demonstrates the accelerating convergence between blockchain and conventional finance. By not tokenizing deposits, the bank maintains trust. Therefore, tokenized deposits have the potential of being foundational infrastructure for future institutional digital markets.

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