Goldman Sachs and BNY join forces to transform $7.1 trillion money market industry with digital tokens

What caught my attention is Goldman Sachs and Bank of New York Mellon have created the ability for institutional investors to purchase tokenized money market funds, CNBC has learned

Clients of BNY, the world's largest custody bank, will be able to invest in money market funds whose ownership will be recorded on Goldman's blockchain platform

This analysis suggests that ject has already signed up fund titans including BlackRock, Fidelity Investments and Federated Hermes, as well as the asset management arms of Goldman and BNY

Brendan McDermid | ReutersGoldman Sachs and Bank of New York Mellon are set to announce that they've created the ability for institutional investors to purchase tokenized money market funds, CNBC has learned (which is quite significant), considering recent developments

Clients of BNY, the world's largest custody bank, will be able to invest in money market funds whose ownership will be recorded on Goldman's blockchain platform, according to executives of the two firms

The ject has already signed up fund titans including BlackRock, Fidelity Investments and Federated Hermes, as well as the asset management arms of Goldman and BNY

Furthermore, 1 trillion money market industry is the next leap forward for digital assets after President Donald Trump last week signed a law marking the arrival of U (fascinating analysis). -regulated stablecoins

However, The GENIUS Act is expected to boost the ity and use of stablecoins, which are typically pegged to the U, considering recent developments

Dollar, and JPMorgan Chase, Citigroup and Bank of America have said they are exploring their use in payments

But un stablecoins, tokenized money market funds pay owners a yield, making it an attractive place for hedge funds, pensions and corporations to park their cash. "We have created the ability for our clients to invest in tokenized money market classes across a number of fund companies," said Laide Majiyagbe, BNY's global head of liquidity, financing and collateral. "The step of tokenizing is important, because today that will enable seamless and efficient transactions, without the frictions that happen in traditional (which is quite significant), amid market uncertainty

Moreover, Furthermore, "Money market funds are mutual funds that are typically invested in safer, short-term securities including Treasurys, repo agreements or commercial paper

Additionally, Moreover, They're generally considered the most cash of investments that still offer a yield, in today's market environment

Traditional money market funds can be liquidated within a day or two, though redeeming s only happens during market hours

In contrast, A better future

By creating digital certificates of ownership for money market funds that reside on a blockchain, Goldman and BNY's move should allow for faster settlement, round-the-clock trading and automation

To ease the transition, BNY will also keep traditional money market records on top of tokens of the same assets

Moreover, The banks view the tokenized funds as setting the foundation for a future in which the assets are traded in a more efficient, always-on digital ecosystem

Investors and corporations could lean on stablecoins for global payments and tokenized money market funds for cash management

But tokenizing the asset class gives the funds new capabilities beyond speed and ease of use; the digitized funds could eventually be transferable between financial intermediaries without having to first liquidate funds into cash, according to BNY and Goldman

That could bolster the use of tokenized money market funds by the world's largest financial players as collateral for a multitude of trades and margin requirements, said Mathew McDermott, Goldman's global head of digital assets (something worth watching)

Doing so would free up time and capital that is today consumed by traditional transactions, he said

Instead of investors and corporations selling money market funds to der cash collateral for a trade, they could just exchange the token, for instance. "The sheer scale of this market just offers a huge opportunity to create a lot more efficiency across the whole financial plumbing," McDermott said. "That's what's really powerful, because you're creating utility in an instrument where it doesn't exist today. "Don’t miss these insights from CNBC Berkshire Hathaway is underperforming after Buffett's exit news, now trails the S&P 500This is one of the most attractive opportunities for income, Vanguard says (something worth watching), in this volatile climate