Radhika Parashar
- MMFs are short term debt securities that are touted as highly liquid in nature
- Goldman Sachs and BNY are looking to analyse if this initiative can enhance the utility and transferability of existing MMF shares
- Investors will need to head to BNY’s LiquidityDirect platform to engage with this newly launched solution
Wall Street mammoths are now foraying deeper into exploring the potential use cases of blockchain-enabled financial services. In a fresh development, Bank of New York (BNY) and Goldman Sachs have come together to bring a solution to let individuals invest in tokenised money market funds (MMFs).
The lenders are essentially banking on their established market reputations aiming to enable a confident pivot of retail and institutional clients from traditional finance to newer, more advance fintech models. The idea behind this particular initiative is to analyse if it can enhance the utility and transferability of existing MMF shares.
As part of this initiative, BNY will use Goldman Sachs’ proprietary blockchain to record the customer ownership of specific Money Market Funds (MMFs), said the official announcement posted on Wednesday, July 23. These records will be saved as digital tokens on Goldman’s blockchain.
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A type of mutual funds, MMFs are short term debt securities that are touted as highly liquid in nature. U.S. treasury bills, commercial papers by credible fintech firms, and repurchase agreements are among assets that can be constituted as part of MMFs.
To use this feature, investors will need to head to BNY’s LiquidityDirect platform that is integrated with Goldman’s Digital Assets Platform (GS DAP) to subscribe and redeem MMF shares.
“As the financial system transitions toward a more digital, real-time architecture, BNY is committed to enabling scalable and secure solutions that shape the future of finance. Mirrored tokenization of MMF shares is a first step in this transition,” said senior BNY official, Laide Majiyagbe.
For Goldman Sachs, this initiative is another feather in its hat in terms of pioneering more blockchain-enabled financial services.
“Using tokens representing the value of shares of MMFs on GS DAP would enable us to unlock their utility as a form of collateral and open up more seamless transferability in the future,” said Mathew McDermott, Global Head of Digital Assets at Goldman Sachs.
Goldman has been experimenting with blockchain and crypto services for a while now. For instance, It launched its GS DAP platform back in 2022. This platform was created on a private permissioned blockchain developed by Goldman. The same year, the bank had joined hands with Barclays to invest in billionaire Alan Howard’s crypto trading platform dubbed the Elwood Technologies.
BNY, Mastercard and HSBC are also among banking titans that have stepped in to explore usecases for blockchain and crypto – contributing to a rise in the institutional adoption of these technologies.
