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 an effort to modernize its global payments infrastructure and keep pace with a growing shift to blockchain-based financing.
The effort, which is still in its exploratory stages, aims to let customers make payments using tokenized versions of their deposits, Bloomberg reports.
These tokenized deposits would be moved across a blockchain, allowing for near-instant settlement and potentially reducing transaction fees. BNY currently processes approximately $2.5 trillion in payments every day.
BNY’s Carl Slabicki told Bloomberg that the technology could help banks “overcome traditional limitations,” allowing them to move money more quickly within their own networks and ultimately across the broader financial system.
BNY Mellon joins a growing list of major banks experimenting with tokenized funds. JPMorgan began testing its JPMD token on Coinbase’s Base blockchain in June, while in Europe nine banks are building MiCA-compliant euro stablecoins.
Over the summer, BNY Mellon and Goldman Sachs teamed up to roll out tokenized money market funds for 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 obtaining crypto deposits.