BNY targets $8.6 trillion transfer agency market on blockchain rails

BNY targets $8.6 trillion transfer agency market on blockchain rails

The world’s largest custodian will keep its existing system while adding a digital ownership record for tokenized funds.

Bank of New York Mellon is shifting its core transfer agency record-keeping onto blockchain to create a single on-chain ownership ledger and reduce reliance on intermediaries. The move will initially support clients including Baillie Gifford, BlackRock and BNY’s Dreyfus unit for what is described as the first fully native U.K.-regulated tokenized fund and other planned tokenized products. While BNY and other major banks are building blockchain-based infrastructure and tokenized deposit networks, the bank expects traditional systems to coexist for years amid ongoing cyber and smart-contract risks.

BNY, which has more than $59tn in assets under custody and administration, is moving one of its core record-keeping businesses onto blockchain as Wall Street builds the infrastructure for tokenized funds, the Financial Times reported Thursday.

"We think of BNY as modernizing a function that sits behind every single fund transaction by bringing the books and records onchain," Carolyn Weinberg, chief product and innovation officer at the 242-year-old financial services giant.

BNY, which services about $8.6 trillion in assets across 7.6 million accounts, said moving its transfer agency onto blockchain would create a single record of ownership, cutting out the need for multiple intermediaries.

"We fully recognize you've got trillions and trillions of dollars' worth of funds that... will continue to exist on traditional rails," said Emily Portney, BNY's global head of asset servicing, the bank's largest business.

BNY did not immediately respond to a CoinDesk request for further information.

Baillie Gifford, a BNY client with more than $261 billion under management, will use the service for what the companies describe as the first fully native U.K.-regulated tokenized fund, according to FT. BlackRock and Dreyfus, BNY’s money-market and cash-management business, are expected to use it for planned funds.

BlackRock, Franklin Templeton and other asset managers have launched tokenized money-market funds in recent years. The funds hold short-term debt and cash but issue ownership interests as blockchain tokens.

Edwin Mata, CEO and founder of tokenization platform Brickken, estimates that Wall Street will run entirely on blockchain technology by 2030. America's biggest banks, including JPMorgan, Citi and Bank of America, plan to build a shared, tokenized deposit network by the first half of 2027 to protect their deposits from the threat posed by stablecoins.

BNY does not expect the old system to disappear, FT said. The bank will keep its traditional transfer agent and says trillions of dollars in funds will remain on existing rails for years. Blockchain also brings cyber risks, including bugs in smart contracts and bridges linking networks. BNY is betting that a single ownership ledger can replace some of the costly reconciliation work that still runs through fund administration.

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Crypto Flows, Share and the Selective Rotation

Crypto Flows, Share and the Selective Rotation

Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.

Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.

Why it matters:

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