Major U.S. Bank BNY Enters On-Chain Cash Race with Tokenized Deposit Pilot

BNY has launched a new tokenized deposit service that enables clients to transfer funds using blockchain technology. This initiative represents a significant step by one of the world's leading banks into the realm of digital assets.

Key Takeaways

BNY has introduced tokenized deposits, allowing for on-chain transfers while ensuring that funds remain within the regulated banking environment.
This service enables quicker, 24/7 settlements and supports programmable transactions for collateral and margin operations.
The development is indicative of a broader trend of institutional adoption of tokenization among major global banks.

In a statement released on Friday, BNY announced that it has created an on-chain representation of client deposit balances via its Digital Assets platform.

This initiative is the first step in the bank’s strategy to tokenize deposits, starting with applications in collateral and margin workflows.

Major US Bank BNY Enters On-Chain Cash Race With Tokenized Deposit Pilot

Tokenized Deposits Reflect Bank Balances On-Chain

The tokenized deposits function as digital book entries that mirror clients’ existing demand deposit claims against the bank.

While these balances are reflected on-chain, they are also maintained in BNY’s traditional databases, ensuring consistency in regulatory, accounting, and reporting obligations.

This new functionality operates on BNY’s private, permissioned blockchain and is subject to the bank’s established risk and compliance policies.

BNY highlighted that the introduction is aimed at facilitating programmable, near-real-time cash transfers as financial markets evolve towards continuous operation.

Tokenized deposits could help diminish settlement friction, enhance liquidity efficiency, and enable rules-based payments throughout institutional processes.

Initial users of this service include Intercontinental Exchange, Citadel Securities, DRW Holdings, Baillie Gifford, Circle, Ripple Prime, and various other financial and digital asset companies.

ICE has indicated that it will support tokenized deposits across its clearinghouses in preparation for 24/7 trading and settlement.

In September, BNY shared its plans to advance custody services for Bitcoin and Ethereum, specifically for its exchange-traded product (ETP) clients.

Earlier this year, it was reported that the SEC’s Office of the Chief Accountant evaluated BNY Mellon’s approach to crypto custody.

The SEC did not raise objections to BNY Mellon’s decision to exclude these crypto assets from its balance sheet liabilities.

This review was significant due to the SEC’s SAB 121 rule, which mandates that banks record the crypto assets they hold as liabilities as well as assets on their balance sheets.

However, BNY Mellon’s unique situation with ETPs allows it to avoid this requirement.

RWA Tokenization Gains Traction

Recently, Libeara, a blockchain infrastructure firm backed by Standard Chartered’s SC Ventures, launched a new tokenized gold investment fund in Singapore, bringing a traditional safe-haven asset into the digital space.

This fund was created in association with FundBridge Capital and enables professional investors to access gold through tokens issued on Libeara’s blockchain ledger.

A recent study by Web3 digital property company Animoca Brands suggests that the tokenization of Real World Assets (RWAs) could unlock a staggering $400 trillion market in traditional finance.

Animoca researchers Andrew Ho and Ming Ruan pointed out that the global market for private credit, treasury debts, commodities, stocks, alternative funds, and bonds offers significant growth opportunities.

“The estimated $400 trillion addressable TradFi market highlights the substantial growth potential for RWA tokenization,” they noted.

Additionally, according to the 2025 Skynet RWA Security Report, the market for tokenized RWAs could expand to $16 trillion by 2030.