Goldman Sachs, BNY Mellon go all in on $7 trillion tokenized money market

Goldman Sachs and Bank of New York Mellon are rolling out a system that lets big investors buy tokenized money market funds.

According to both firms, institutional clients of BNY will now be able to invest in these funds, and ownership will be recorded directly on Goldman Sachs’ blockchain.

This brings blockchain smack into the center of the $7.1 trillion money market fund sector. And no, they’re not going at it alone. Giants like BlackRock, Fidelity Investments, and Federated Hermes are already onboard. Plus, the asset management arms of Goldman Sachs and BNY are part of the deal. The tech, the money, and the muscle are already lined up.

Let’s talk about the actual market here. Money market funds are mutual funds that usually hold short-term assets like Treasuries, commercial paper, or repurchase agreements. They’re seen as ultra-safe and super liquid, which is why investors have thrown about $2.5 trillion into them since the Fed started jacking up rates in 2022, according to data from CNBC.

BNY clients to access tokenized funds via Goldman’s blockchain

Just last week, President Donald Trump signed the GENIUS Act, which finally brought stablecoins into the U.S. legal framework. That opened the floodgates. JPMorgan Chase, Citigroup, and Bank of America said they’re now actively exploring stablecoin payments.

But unlike stablecoins, which just track the U.S. dollar, tokenized money market funds pay a yield. That alone makes them way more attractive to hedge funds, pension managers, and corporate treasurers looking for safe places to stash large sums of cash. Think of it as parking cash with benefits.

Laide Majiyagbe, who leads liquidity and collateral at BNY, explained it this way: “We have created the ability for our clients to invest in tokenized money market share classes across a number of fund companies.” She added, “The step of tokenizing is important, because today that will enable seamless and efficient transactions, without the frictions that happen in traditional markets.”

So here’s how it works: Goldman Sachs and BNY are using blockchain to create digital certificates of ownership for these funds. Once tokenized, the assets are easier to move, faster to settle, and available 24/7. That last part alone kills the old problem of markets closing at 4 p.m. or settling only during certain hours. These things will move anytime, day or night.

To keep everything clean for investors used to the old system, BNY will still maintain traditional records. So they’re layering the new tech over the legacy system for now. That way, nobody gets burned in the transition.

Tokenized funds enable real-time collateral and trading

Goldman Sachs and BNY see this as a foundation for a full digital trading ecosystem. Picture a future where global payments happen through stablecoins, and money markets get managed via tokenized funds. It’s a real-time, always-on system with zero middlemen clogging things up.

Mathew McDermott, Goldman Sachs’ head of digital assets, said: “The sheer scale of this market just offers a huge opportunity to create a lot more efficiency across the whole financial plumbing. That is what’s really powerful, because you’re creating utility in an instrument where it doesn’t exist today.”

Right now, if a hedge fund needs to post collateral, they often have to sell a fund, wait for settlement, and deliver cash; all that takes time. With tokenized funds, you just transfer the token, done, saving both capital and time, two things no one likes to waste.

Under the traditional model, these funds can be redeemed in a day or two, but only during market hours. With the tokenized model, that timeline shrinks. Transactions can now happen instantly, any time of day. That’s a massive improvement for traders, treasury managers, and anyone who hates waiting.

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