BNY Mellon Jumps Into the On-Chain Cash Arena: Tokenized Deposit Pilot Signals Major Banking Shift
Wall Street's quiet giant just made a blockchain power move. BNY Mellon—the world's largest custodian bank—isn't just watching the tokenization race from the sidelines anymore. It's building its own lane.
The Pilot: More Than a Test
Forget theoretical white papers. BNY is launching a live pilot for tokenized deposits, transforming traditional bank balances into programmable digital assets on a private blockchain. This isn't about crypto speculation; it's about making the bank's own money move at internet speed—settling in seconds, available 24/7, and cutting out the legacy plumbing that adds days (and fees) to every transaction.
Why This Changes the Game
When the bank that safeguards over $46 trillion in assets starts treating cash like a digital token, the entire financial infrastructure shudders. It's a direct challenge to the slow, correspondent-banking model that has dominated for decades. This pilot bypasses the old guard, proving that institutional-grade, regulated cash can live on-chain without waiting for central bank digital currencies.
The Real Race Isn't Public
While retail eyes are glued to Bitcoin's price, the real battle is happening in the back offices of global finance. JPMorgan, Citi, and now BNY are all sprinting to digitize the lifeblood of the economy: cash itself. The winner doesn't just get a trophy; they get to set the rules for the next century of money movement—and collect the rent. A cynical take? It's the ultimate hedge: if you can't beat decentralized finance, rebrand your own centralized ledger and charge for the upgrade.
This pilot is a starting gun. Tokenization isn't coming for finance; finance is finally, reluctantly, coming for tokenization—and bringing its balance sheet with it.
BNY Says Tokenized Deposits Mirror Bank Balances On-chain
The tokenized deposits operate as digital book entries that reflect clients’ existing demand deposit claims against the bank.
While balances are mirrored on-chain, they continue to be recorded on BNY’s traditional systems, ensuring regulatory, accounting, and reporting consistency.
The capability runs on BNY’s private, permissioned blockchain and is governed by the bank’s existing risk and compliance frameworks.
BNY said the launch is designed to support programmable, near-real-time cash movement as financial markets shift toward always-on operating models.
Tokenized deposits could help reduce settlement friction, improve liquidity efficiency, and allow rules-based payments across institutional workflows.
Early participants include Intercontinental Exchange, Citadel Securities, DRW Holdings, Baillie Gifford, Circle, Ripple Prime, and several other financial and digital asset firms.
BREAKING: #BNY expands digital cash capabilities by enabling the on‑chain mirrored representation of client deposit balances on its #DigitalAssets platform via #tokenized deposits.
This launch helps advance BNY’s ambitions to support programmable, on‑chain cash for institutional… pic.twitter.com/gQRiZuS0va
ICE said it plans to support tokenized deposits across its clearinghouses as it prepares for 24/7 trading and settlement.
In September, BNY announced it is making strides towards offering custody services for bitcoin and Ether, specifically for its exchange-traded product (ETP) clients.
Earlier this year, the SEC’s Office of the Chief Accountant reportedly reviewed BNY Mellon’s approach to crypto custody.
The SEC didn’t object to BNY Mellon’s decision not to include these crypto assets as liabilities on its balance sheet.
The review was key because of the SEC’s SAB 121 rule, which requires banks to account for crypto assets they safeguard as both a liability and an asset on their balance sheets.
BNY Mellon’s unique case with ETPs, however, which bypasses this requirement.
RWA Tokenization Gains Momentum
Last month, Libeara, the blockchain infrastructure platform backed by Standard Chartered’s venture arm SC Ventures, rolled out a new tokenized gold investment fund in Singapore, bringing one of the world’s oldest safe-haven assets onto digital rails.
The fund, launched in partnership with FundBridge Capital, allows professional investors to gain exposure to gold through blockchain-based tokens issued on Libeara’s ledger.
In a recent research, Web3 digital property firm Animoca Brands said that tokenization of RWAs could unlock a $400 trillion traditional finance market.
Animoca researchers Andrew Ho and Ming Ruan said the global market for private credit, treasury debt, commodities, stocks, alternative funds, and bonds represents a vast runway for growth.
“The estimated $400 trillion addressable TradFi market underscores the potential growth runway for RWA tokenization,” they wrote.
Meanwhile, according to the 2025 Skynet RWA Security Report, the market for tokenized RWAs could grow to $16 trillion by 2030.
