BNY launches digital transfer agent for tokenized funds: FT
RWA Signal Insight
InfrastructureBNY, the world's largest custodian bank with over $59 trillion in assets, is launching a digital transfer agency platform to process fund transactions and maintain shareholder records on-chain. This initiative marks a significant shift for the bank as it integrates blockchain technology into its core operations to run alongside traditional financial infrastructure. By utilizing a shared ledger, the platform aims to reduce intermediaries, accelerate settlement times, and enable round-the-clock trading for investment funds. Baillie Gifford is set to be the first client to utilize this infrastructure for a fully native, UK-regulated tokenized fund. Additionally, BNY’s Dreyfus division and BlackRock are expected to launch funds using the same blockchain-based system. Executives emphasize that this shared source of truth will drastically reduce the reconciliation burdens typically faced by financial institutions. While the move signals a major institutional adoption of tokenization, the bank acknowledges that legacy systems will remain in place for years while addressing cybersecurity risks related to smart contracts and bridges.
Key points
- BNY manages over $59 trillion in assets and is launching an on-chain transfer agency.
- Baillie Gifford will be the first client for a UK-regulated tokenized fund.
- BlackRock and BNY’s Dreyfus division are expected to utilize the new blockchain infrastructure.
- The platform aims to reduce reconciliation, accelerate settlement, and enable 24/7 trading.
Background
BNY (formerly Bank of New York Mellon) is a global financial services company and the world's largest custodian bank. Transfer agencies are financial institutions responsible for maintaining records of who owns a company's stocks or bonds and managing the issuance and cancellation of certificates.