Wall Street Goes Crypto? BNY & Goldman Sachs Unlock $55T Market with Tokenized Funds

dfmines Cryptocurrency News July 23, 2025 | 0

Key Takeaways:

BNY Mellon and Goldman Sachs debut tokenized money market funds (MMFs), allowing blockchain-based ownership tracking and near-instant settlement.
Top financial institutions including BlackRock, Fidelity, and Federated Hermes join the initial rollout, signaling growing adoption of digital asset infrastructure.
GS DAP® platform enables mirrored tokens of MMF shares, potentially turning traditional funds into real-time, collateral-ready digital instruments.

A groundbreaking partnership between two of Wall Street’s oldest institutions marks a new era for crypto and traditional finance. The Bank of New York Mellon (BNY) and Goldman Sachs have launched the first blockchain-powered money market fund subscription and redemption platform in the U.S., offering tokenized versions of traditional MMFs, potentially reshaping how trillions of dollars move across markets.

BNY & Goldman Sachs Bridge TradFi to Blockchain

For the first time in U.S. financial history, institutional investors can subscribe to and redeem shares of money market funds through a blockchain-integrated platform. The solution, jointly developed by BNY Mellon and Goldman Sachs Digital Assets, utilizes Goldman’s GS DAP® blockchain to issue mirror tokens that represent MMF share ownership.

The initiative is executed through BNY’s LiquidityDirect℠, a market-leading cash investment portal, now connected to GS DAP via BNY’s internal Digital Assets platform.

These mirrored tokens act as digital counterparts of traditional MMF shares, providing enhanced transferability, real-time settlement, and potential future use cases like on-chain collateral.

“This is a foundational shift,” said Laide Majiyagbe, Global Head of Liquidity, Financing, and Collateral at BNY. “Tokenizing MMF shares opens doors to scalable, secure real-time finance.”

Wall Street Heavyweights Back the Launch

The collaboration is already backed by top-tier asset managers:

BlackRock
Fidelity Investments
Federated Hermes
BNY Investments Dreyfus
Goldman Sachs Asset Management

These institutions collectively manage trillions of dollars, and their participation sends a strong signal: tokenized finance is entering the mainstream.

While the service will initially support MMF subscriptions and redemptions, the long-term vision is much broader, delivering instant, 24/7 liquidity to the previously illiquid market of traditional financial products.

Why Tokenized MMFs Matter

Money market funds, which are invested mostly in short-term U.S. Treasury or other low-risk instruments, have long been a low-volatility place to park cash for corporate and institutional investors.

Yet while traditional MMFs are rock solid, they can be slow (T+1 and T+2 settlement is not unusual, for example), the interoperability is minimal and the back office systems are effectively silos.

Tokenized MMFs change that by:

Enabling 24/7 market access
Improving settlement times from days to seconds
Allowing programmable use cases (e.g., collateral pledging)
Facilitating fractional ownership and real-time tracking

With over $6 trillion in U.S. MMFs alone, the tokenization of even a small share could unlock unprecedented liquidity across the crypto and TradFi ecosystems.

How the Technology Works

The mirrored tokenization structure doesn’t replace traditional fund infrastructure, it enhances it.

BNY continues to maintain official books and records under current regulatory oversight.
Goldman’s GS DAP® (Digital Asset Platform) creates blockchain-based representations of MMF shares, using Digital Asset’s Canton blockchain technology.
These tokens are not tradeable on public markets (yet), but are issued on a permissioned private ledger, ensuring regulatory compliance and institutional-grade security.

“Tokens representing MMF shares unlock new utility as collateral and transferability,” said Mathew McDermott, Global Head of Digital Assets at Goldman Sachs. “We’re only at Phase One.”

Phase One Now, Permissionless Future?

While GS DAP currently operates on a private, permissioned blockchain, Goldman and Digital Asset are also contributors to the broader Canton Network, an evolving decentralized network backed by global financial institutions.

Canton aims to blend privacy, interoperability, and decentralization, and may one-day support permissionless access. This vision could open the door for:

MMF token listings on decentralized exchanges (DEXs)
Cross-chain asset settlement
Integration with DeFi platforms and protocols

For now, however, BNY and Goldman are focusing on institutional clients, prioritizing regulatory safety and infrastructure readiness over retail accessibility.

Tokenized Funds Gain Momentum Amid Regulatory Shifts

This move comes amid a broader trend of institutional tokenization and a favorable U.S. regulatory environment.

Interest-Bearing Stablecoin Ban Sparks Demand for Alternatives

The new GENIUS Act, which was enshrined into U.S. law in July 2025, outlaws interest-bearing stablecoins, closing down a crucial yield-generation avenue in crypto markets.

Tokenized MMFs represent a legal, regulated substitute and provide yield on idle cash without regulatory ambiguity. The result? Hedge funds, corporates, and traditional institutions are now beginning to look at tokenized MMFs as the next destination for digital cash management.

Fast forward a year and a half and tokenized short-duration funds are already at $5.7 billion in AUM as of 2021 and Moody’s projects that 2025 will set a new record.

BNY and Goldman’s partnership, then, represents more than just a tech refresh; it represents a significant advancement in a digital-native financial system in which blockchain serves as the bedrock for even the most buttoned-down of assets.

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Wall Street Goes Crypto? BNY & Goldman Sachs Unlock $55T Market with Tokenized Funds