Blockchain-Based Money Market Funds Take Shape
Goldman Sachs and Bank of New York Mellon have launched a system that allows institutional investors to purchase tokenized money market funds, marking a significant step towards digitizing the $7.1 trillion industry.
The initiative enables BNY clients to invest in money market funds with ownership recorded on Goldman's blockchain platform. This means investors can now hold a digital representation of these funds, which offers yield payments to owners.
This technology has attracted major fund companies including BlackRock, Fidelity Investments, and Federated Hermes as partners, alongside the asset management divisions of both Goldman and BNY.
The digitized funds may eventually allow direct transfers between financial intermediaries without requiring liquidation to cash first. This capability could enhance the utility of money market funds as collateral for various trading activities and margin requirements.