BNY Mellon has launched a tokenized deposit service, allowing clients to transfer funds through blockchain rails. This initiative marks a significant step for the global bank in expanding its digital asset offerings and working towards 24/7 operational capability. The tokenized deposits are an on-chain representation of BNY client funds and can be utilized for collateral, margin transactions, and faster payments.
The bank's move is driven by the financial market's shift towards continuous operating models, where institutions seek more efficient asset movement, better settlement certainty, increased transparency, and enhanced liquidity. Tokenized deposits aim to reduce settlement friction, improve liquidity efficiency in collateral and margin workflows, and facilitate programmable payments and settlements. BNY plans to support rules-based, near real-time cash movements in the future to further boost efficiency for its institutional clients.
This capability creates on-chain digital book entries that mirror client demand deposit claims against the bank, operating on BNY's private, permissioned blockchain under established risk and compliance frameworks. While client balances are still recorded on traditional systems for regulatory integrity, this development represents BNY's first step in its strategy to tokenize deposits. Carolyn Weinberg, Chief Product and Innovation Officer at BNY, emphasized that tokenized deposits allow the bank to extend trusted deposits onto digital rails, enabling clients to operate with greater speed across various financial activities within a robust framework.
Early participants in this project include a diverse group of prominent financial institutions and digital native companies. BNY's long-term goal is to enable programmable, on-chain cash for institutional market infrastructure, furthering the interoperability between stablecoins and traditional assets. This initiative follows previous collaborations, such as with Goldman Sachs in July 2025 to bring money market funds onto blockchain infrastructure, and the introduction of a money market fund in November 2025 to support digital asset adoption.
