Bank of New York Mellon (BK), the world’s largest custodian bank with $55.8 trillion in assets under custody, is testing tokenized deposits in a bid to modernize its global payments infrastructure and keep pace with a growing shift toward blockchain-based finance.
The effort, still in the exploratory phase, aims to allow customers to make payments using tokenized versions of their deposits, Bloomberg reports.
These tokenized deposits would move through a blockchain, allowing for near-instant settlement and potentially reducing transaction costs. BNY currently handles around $2.5 trillion in payments each day.
BNY’s Carl Slabicki told Bloomberg that the technology could help banks “overcome legacy limitations,” allowing them to move money faster within their own networks and, eventually, across the entire financial system.
BNY Mellon joins a growing list of large banks experimenting with tokenized funds. JPMorgan began testing its JPMD token in June on Coinbase’s Base blockchain, while in Europe, nine banks are building a MiCA-compatible euro stablecoin.
Over the summer, BNY Mellon and Goldman Sachs partnered to roll out tokenized money market funds to clients. The financial institution’s CEO, Robin Vince, has said in the past that the bank would not be as aggressive as other lenders in trying to obtain crypto deposits.
