Key facts
- BNY Mellon is moving its core transfer agency record-keeping onto blockchain.
- The transfer agency business services approximately $8.6 trillion in assets.
- The goal is to establish a single on-chain ownership ledger.
- Baillie Gifford will use the service for a U.K.-regulated tokenized fund.
- BlackRock and Dreyfus are also expected to utilize the new system for planned funds.
Bank of New York Mellon is transitioning its core transfer agency record-keeping operations to a blockchain-based system, aiming to establish a single, on-chain ownership ledger and decrease reliance on intermediaries. This strategic move is designed to modernize a fundamental aspect of fund transactions.
The initiative will initially support clients such as Baillie Gifford, BlackRock, and BNY's own Dreyfus unit. It will be utilized for what is described as the first fully native, U.K.-regulated tokenized fund, as well as other forthcoming tokenized products.
While BNY Mellon and other major financial institutions are actively developing blockchain infrastructure and tokenized deposit networks, the bank anticipates that traditional systems will continue to operate alongside blockchain technology for several years. This coexistence is attributed to ongoing concerns regarding cyber risks and smart-contract vulnerabilities.
BNY Mellon, which manages over $59 trillion in assets under custody and administration, services approximately $8.6 trillion in assets across 7.6 million accounts through its transfer agency business. The shift to blockchain is expected to streamline ownership records and reduce the need for multiple intermediaries, thereby cutting down on costly reconciliation work in fund administration.
Baillie Gifford, managing over $261 billion, will leverage the service for its tokenized fund. BlackRock and Dreyfus are also slated to use the platform for their planned tokenized offerings. This development aligns with a broader trend of asset managers launching tokenized money-market funds, where ownership interests are issued as blockchain tokens.
Industry experts, like Edwin Mata, CEO of tokenization platform Brickken, predict that Wall Street could be entirely blockchain-based by 2030. Major U.S. banks are also planning a shared tokenized deposit network by mid-2027 to enhance deposit security against stablecoin threats.
BNY Mellon has stated that its traditional transfer agent services will remain in place, and significant fund assets will continue to operate on existing infrastructure for the foreseeable future. The bank acknowledges the inherent risks associated with blockchain, including potential bugs in smart contracts and network bridges, but is betting on the efficiency gains from a unified ownership ledger.