Goldman Sachs Group Inc (NYSE:GS) and Bank of New York Mellon Corp (NYSE:BK) are reportedly rolling out a blockchain-based solution that allows institutional investors to purchase 'tokenized' money market fund shares.
Under the initiative, first reported by CNBC on Wednesday, clients of BNY Mellon, the world’s largest custody bank, will be able to invest in money market funds with ownership recorded directly on Goldman Sachs’ proprietary blockchain platform.
The effort is already said to have attracted several major asset managers, including BlackRock, Fidelity Investments, and Federated Hermes, alongside the asset management arms of both banks.
The move comes shortly after the passage of the GENIUS Act, signed into law by President Donald Trump last week, which introduced the first regulatory framework for US-backed stablecoins.
Other banks such as JPMorgan, Citigroup and Bank of America have revealed they are also working on plans to use stablecoins for payments, while Goldman and BNY are said to prefer a digital version of existing investment vehicles.
While stablecoins are typically pegged to the US dollar and used primarily for payments, tokenized money market funds (TMMFs) provide investors with yield at the same time, while also offering capital efficiency with low risk for some hedge funds, pension schemes and corporates.
TTMFs are not unique to Goldman and BNY, with Standard Chartered PLC (LSE:STAN) saying in May these are useful tools in the payments space due to their price stability and potentially lower costs.
StanChart said in a blog that it views such digital assets as "fundamentally altering the ecosystem for financial markets in ways that should ultimately reduce operational costs, risks and delays" and is "actively working with clients to ensure they benefit from these changes".
The CNBC report said Goldman and BNY see them as a building block for a future ecosystem in which money market funds can be traded and transferred in real time between institutions, without the need to liquidate assets into cash.