$7.1 Trillion Industry Goes Digital as Goldman Sachs, BNY Mellon Tokenize Cash Funds
Goldman Sachs and Bank of New York Mellon have launched tokenized money market funds, marking a major leap in the digitization of traditional finance.
According to CNBC, clients of BNY Mellon, the world’s largest custody bank, can now invest in money market funds with ownership recorded directly on Goldman Sachs’ blockchain platform. This strategic move aims to attract institutional investors who desire faster and more efficient transactions within the expansive $7.1 trillion money market sector.
The initiative has already garnered support from prominent fund managers, including industry giants such as BlackRock, Fidelity Investments, Federated Hermes, and the asset management divisions of both Goldman Sachs and BNY Mellon.
“We have created the ability for our clients to invest in tokenized money market share classes across a number of fund companies,” noted Laide Majiyagbe, BNY’s global head of liquidity, financing, and collateral. “The step of tokenizing is important because today that will enable seamless and efficient transactions, without the frictions that happen in traditional markets.”
Money market funds typically hold low-risk, short-term assets like Treasuries and commercial paper, making them a favored vehicle for cash management, especially as yields have risen in recent months. Since 2022, both institutional and retail investors have poured approximately $2.5 trillion into these funds, driven by the Federal Reserve’s interest rate hikes.
Goldman Sachs Believe Tokenization Unlocks Real-Time Utility
In contrast to stablecoins, which maintain a price peg to the U.S. dollar, tokenized money market funds offer tangible yields, making them particularly appealing to hedge funds, pension funds, and corporations. This advancement follows last week’s signing of the GENIUS Act by President Donald Trump, which establishes a regulatory framework for U.S. stablecoins.
The tokenized format not only enhances the efficiency of financial operations but also broadens the potential for collateral use in trades or margin requirements. “The sheer scale of this market just offers a huge opportunity to create a lot more efficiency across the whole financial plumbing,” stated Mathew McDermott, Goldman’s global head of digital assets. “That is what’s really powerful, because you’re creating utility in an instrument where it doesn’t exist today.”
Overall, this innovative approach marks a significant evolution in the financial landscape, aiming to streamline processes and maximize operational efficiency.
