Bank of New York Mellon Corp. (BNY) (NYSE: BK), which claims to be one of the world’s largest custodian bank with over $55.8 trillion in assets under custody and administration, is said to be actively piloting tokenized deposits in order to integrate DLT / blockchain technology into its existing digital payments infrastructure.
According to a Bloomberg report, this initiative aims to enable clients to execute payments using digital representations of their commercial bank deposits on blockchain networks, facilitating near-instant, 24/7 settlements while addressing limitations of outdated legacy systems that are no longer fit for the always-on digital economy.
BNY’s Treasury Services unit, which processes approximately $2.5 trillion in daily payments, views tokenized deposits—essentially bank-issued, transferable digital tokens backed 1:1 by fiat deposits—as a tool to modernize real-time, instant, and cross-border transactions.
Carl Slabicki, executive platform owner for Treasury Services at BNY, emphasized in the interview that this could help banks “overcome legacy technology constraints,” allowing seamless movement of funds within internal ecosystems and, eventually, across broader financial markets as interoperability standards evolve.
The project remains in an exploratory phase but builds on BNY’s prior blockchain efforts, including a July 2025 collaboration with Goldman Sachs to tokenize money market funds (MMFs) on Goldman’s private blockchain, providing institutional clients with real-time settlement and round-the-clock access.
BNY is also among over 30 institutions partnering with SWIFT on a shared blockchain ledger for real-time international payments, underscoring its commitment to scalable, compliant infrastructure.
Tokenization—the process of converting rights to an asset into a digital token on a blockchain—has evolved from experimental proofs-of-concept into a practical, scalable application in finance, driven by its ability to bridge traditional systems with blockchain’s efficiency.
It represents real-world assets (RWAs) like securities, real estate, commodities, or deposits as programmable, composable tokens, enabling features such as atomic (instantaneous) settlement, 24/7 trading, and automated compliance via smart contracts.
This use case has gained widespread traction due to several factors:
- Historical Emergence: Early pilots date back to 2018–2019, with institutions like Santander issuing tokenized bonds on Ethereum for faster issuance and settlement. By 2021, the European Investment Bank (EIB) tokenized a €100 million bond, demonstrating public blockchain viability. The COVID-19 era accelerated adoption by highlighting inefficiencies in remote, cross-border operations, leading to a surge in private/permissioned blockchains for controlled environments.
- Efficiency and Cost Reduction: Traditional settlements can take T+2 days; tokenization enables near-zero latency, reducing reconciliation layers and freeing up capital (e.g., an estimated $100 billion annually in collateral mobility).
- Liquidity and Accessibility: Fractional ownership allows smaller investors to access high-value assets like real estate or private equity, democratizing markets.
- Transparency and Programmability: Blockchain’s immutable ledger and smart contracts automate processes like dividend payouts or collateral management, enhancing regulatory oversight.
- Interoperability: Tokens can move between on-chain and off-chain systems, supporting hybrid models.
- Scale and Adoption Metrics: As of 2025, tokenized assets exceed $200 million in circulation on public blockchains, with pilots involving over $1 billion in daily transactions (e.g., JPMorgan’s JPM Coin).
The market for tokenized funds alone could reach $290 billion in demand soon, expanding to trillions with broader on-chain money adoption.
Major platforms like the Canton Network (involving 15 asset managers and 13 banks) and Singapore’s Project Guardian have tested tokenized RWAs at scale, indicating viability for securities, funds, and deposits.
Significant challenges still persist, including enabling interoperability between blockchains, regulatory harmonization (e.g., EU’s MiCA for stablecoins), and security risks on public or so-called permissionless networks, but ongoing collaborative efforts by regulators and institutions are now sharply focused on addressing these.