Goldman Sachs and BNY team up to put money market funds on the blockchain

Goldman Sachs and the Bank of New York Mellon Corporation on Wednesday announced a new partnership to bring money market funds on the blockchain.

Through the initiative, BNY investors will be able to put money into money market funds, which will be maintained using Goldman Sachs’ blockchain technology, GS DAP, according to a release. 

“This combined solution marks the first time in the U.S. that fund managers have enabled subscription for shares of their MMFs via BNY’s LiquidityDirectSM and Digital Asset platforms, the corresponding value of which will be represented through mirrored record tokenization utilizing GS DAP,” the release said. 

BNY investors will be able to “subscribe and redeem” their money market fund shares through BNY’s LiquidityDirect platform with "connectivity to GS DAP via integration with BNY’s Digital Assets platform,” the release said, adding that mirror tokens of MMF shares will be created by utilizing Goldman Sachs’ blockchain technology, but BNY will keep maintaining the funds’ official books, records, and settlements.  

The companies said that BlackRock, BNY Investments Dreyfus, Federated Hermes, Fidelity Investments, and Goldman Sachs Asset Management have agreed to participate in the program’s initial launch. 

“As the financial system transitions toward a more digital, real-time architecture, BNY is committed to enabling scalable and secure solutions that shape the future of finance,” Laide Majiyagbe, Global Head of Liquidity, Financing, and Collateral at BNY, said in the release. “Mirrored tokenization of MMF shares is a first step in this transition, and we are proud to be at the forefront of this first-of-its-kind initiative.

“Using tokens representing the value of shares of Money Market Funds on GS DAP would enable us to unlock their utility as a form of collateral and open up more seamless transferability in the future,” Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, said in the release. 

The two financial institutions’ announcement comes days after President Donald Trump signed a crypto bill into law on Friday at the tail end of House Republicans’ proclaimed “Crypto Week.” The GENIUS act intends to regulate stablecoins — a type of token pegged (at least in theory) to more conventional assets, such as the U.S. dollar.