By Niket Nishant (Reuters) -Goldman Sachs and BNY have joined hands to launch digital tokens that mirror shares of money market funds, deepening Wall Street’s push to bring blockchain technology into traditional finance. Investors can now buy and sell money market fund shares on BNY’s LiquidityDirect platform, with a digital record of those shares created […]
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Goldman, BNY team up to launch tokens tied to money market funds
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By Niket Nishant
(Reuters) -Goldman Sachs and BNY have joined hands to launch digital tokens that mirror shares of money market funds, deepening Wall Street’s push to bring blockchain technology into traditional finance.
Investors can now buy and sell money market fund shares on BNY’s LiquidityDirect platform, with a digital record of those shares created on Goldman’s blockchain system, the two financial giants said on Wednesday.
The move marks an early step toward modernizing the infrastructure that underpins most of the financial ecosystem. If adopted broadly, it could make it easier and faster for institutional investors to use these assets as collateral and reduce trade settlement times.
BlackRock, BNY Investments Dreyfus, Federated Hermes, Fidelity Investments and Goldman Sachs Asset Management are among the companies participating in the initial rollout.
Other asset managers are also exploring tokenization. In January, Apollo partnered with Securitize to launch a feeder fund that would channel capital from crypto-native investors into its global credit fund.
GAINING TRACTION
While it is still a subject of debate, tokenization’s potential to drastically reshape the investing landscape has drawn strong interest.
It is being touted as the next breakthrough for bridging the gap between traditional and digital finance, with supporters saying it could open up an asset class that has long been out of reach for retail investors.
“We’re at the precipice of doing something very special, and that’s really the democratization of markets,” said Chris Perkins, president of crypto investment firm CoinFund.
The growing interest in tokenization coincides with the renewed optimism in the crypto industry, which has rallied in recent months and gained momentum after the Genius Act was passed earlier this month.
Critics, however, say tokenization could allow companies to bypass the guardrails put in place to protect retail investors.
Companies may also not consent to having their securities tokenized. Earlier this month, OpenAI objected to Robinhood’s tokens tied to its private shares.
(Reporting by Niket Nishant in Bengaluru; Editing by Shilpi Majumdar)