BNY Mellon Launches Tokenized Deposits for On-Chain Payments: The Old Guard Finally Gets It
Wall Street's oldest bank just threw a digital punch. BNY Mellon—the 240-year-old custodian of the financial aristocracy—has launched tokenized deposits for on-chain payments. This isn't a side-project; it's a full-throated admission that the future of money lives on a blockchain.
From Vaults to Validators
The move bypasses the clunky correspondent banking network entirely. Clients can now move tokenized U.S. dollar deposits across a permissioned blockchain in seconds, 24/7. It cuts settlement times from days to moments and slashes the operational friction that has propped up traditional finance's fee structures for decades. Think of it as digitizing the very concept of a bank balance and making it programmable.
The Institutional On-Ramp Just Got Paved
This is the signal asset managers and hedge funds have been waiting for. BNY Mellon isn't a crypto-native startup; it's a systemic pillar holding over $47 trillion in assets under custody. Its stamp of approval provides the regulatory comfort and institutional-grade plumbing needed to move serious capital on-chain. It effectively builds a sanctioned bridge between the legacy financial system and digital asset rails.
A Cynical Take on a Landmark Move
Let's be real—this is also a brilliant defensive play. Faced with the existential threat of decentralized finance eating their lunch, the giants are co-opting the technology to protect their turf. They'll tout efficiency gains while quietly ensuring the new rails still run through their toll booths. The revolution might be tokenized, but some old banking habits—like finding a way to charge for permission—die hard.
The genie isn't going back in the bottle. When the bank that helped finance the Erie Canal starts settling transactions on a distributed ledger, the debate is over. The infrastructure for the next era of finance is being built—and even the old guard is now pouring the concrete.
Banks link deposits to always-on crypto markets
Clients in the first wave include Intercontinental Exchange, Citadel Securities, DRW Holdings, Ripple Prime, Baillie Gifford, and Circle. The mix covers exchanges, trading firms, asset managers, and a major stablecoin issuer.
Each firm is testing how on-chain deposits work inside real market workflows. BNY Mellon said the service stays within the banking system and can pay interest, which separates it from stablecoins.
Blockchain money can also sit on the settlement side of tokenized stocks and bonds. Banks across the industry have pushed tokenization harder over the past year, mostly to speed up collateral handling. Carolyn Weinberg, chief product and innovation officer at BNY Mellon, said the focus is trust and connection.
“This is very much about connecting traditional banking infrastructure and traditional banking institutions with emerging digital rails and digital ecosystem participants in a way that institutions trust,” Carolyn said.
Other large banks are taking similar steps. JPMorgan Chase began rolling out its JPM Coin to institutional clients last November. HSBC plans to expand its tokenized deposit service to corporate clients in the United States and the United Arab Emirates in the first half of 2026. These efforts followed passage of the Genius Act in the United States, which sets rules for stablecoins. Tokenized deposits differ because they live inside banks and earn interest, while stablecoins are backed by cash or short-term government debt.
BNY Mellon sits among the world’s largest custodians, holding $57.8 trillion in assets under custody or administration. The bank has worked in digital assets for years. In July, it said it was working with Goldman Sachs to use blockchain records for money market fund ownership.
ICE, which owns the New York Stock Exchange, said it will work toward supporting tokenized deposits across its clearinghouses as it updates systems for nonstop trading. Elizabeth King, ICE’s global head of clearing and chief regulatory officer, said the infrastructure is being prepared for around-the-clock use. ICE chairman and chief executive Jeffrey Sprecher said on an earnings call in October that tokenization could lift trading volumes through constant collateral access.
A Core feature of blockchain assets is programmable transactions. BNY Mellon said tokenized deposits can trigger actions automatically once conditions are met. That includes releasing collateral after a loan obligation is satisfied. The bank said this keeps cash inside regulated accounts while letting code handle timing.
The service places BNY Mellon at the center of a growing shift where banks wire traditional deposits into digital rails without stepping outside regulation. Clients now test how far those rails can run.
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