Goldman Sachs and Bank of New York Mellon have teamed up in a landmark move to introduce tokenized money market funds for institutional investors—an initiative they say is the next evolution of digital finance, coming just days after President Donald Trump signed the GENIUS Act into law to formally regulate U.S.-based stablecoins.
Under the new system, clients of BNY Mellon, the world’s largest custody bank, will be able to invest in money market funds with ownership recorded directly on Goldman Sachs’ private blockchain platform. This innovation will allow faster and more frictionless transactions compared to traditional settlement processes.
The pilot program already has heavyweight backers including BlackRock, Fidelity Investments, Federated Hermes, and the asset management divisions of both Goldman Sachs and BNY Mellon. These institutions collectively manage trillions of dollars and are now pushing tokenization as a game-changing breakthrough for finance.
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“We have created the ability for our clients to invest in tokenized money market share classes across a number of fund companies,” said Laide Majiyagbe, BNY’s global head of liquidity, financing, and collateral. “The step of tokenizing is important, because today that will enable seamless and efficient transactions, without the frictions that happen in traditional markets.”
Tokenized money market funds differ fundamentally from stablecoins. While stablecoins are typically pegged to fiat currencies and used for payments, tokenized money market funds generate yield, offering a compelling place for hedge funds, pensions, and corporations to park idle capital.
Money market funds themselves are low-risk investment vehicles that hold short-term securities like U.S. Treasuries, repurchase agreements, and commercial paper. These funds are considered among the safest options for short-term investing, and they allow for relatively quick redemptions. Since the U.S. Federal Reserve began hiking interest rates in 2022, investors have poured approximately $2.5 trillion into the asset class, drawn by rising yields.
Now, Wall Street sees tokenization as a way to modernize that $7.1 trillion industry. By putting money market fund ownership on a blockchain, trades can be executed in real time, around the clock, without needing to go through banks or clearinghouses that traditionally settle transactions during market hours.
Mathew McDermott, global head of digital assets at Goldman Sachs, said tokenized assets offer far more than just speed. They could potentially eliminate the need to liquidate assets when transferring between intermediaries.
“The sheer scale of this market just offers a huge opportunity to create a lot more efficiency across the whole financial plumbing,” McDermott said. “That is what’s really powerful, because you’re creating utility in an instrument where it doesn’t exist today.”
President Trump’s signing of the GENIUS Act has accelerated momentum behind blockchain-based financial infrastructure. The law officially recognizes and regulates U.S. stablecoins, encouraging mainstream institutions to move beyond pilot programs and into production-scale deployment of blockchain solutions.
Major banks including JPMorgan Chase, Citigroup, and Bank of America are also exploring stablecoins for global payment applications. While those projects are ongoing, the move by Goldman and BNY focuses on capital markets and treasury management—areas with deep liquidity needs and the potential for significant cost savings.
The shift hints at a future where digital assets form the backbone of global financial infrastructure. In that world, stablecoins may power real-time payments, while tokenized money market funds anchor short-term liquidity management and serve as collateral in complex transactions.
For Wall Street, the digitization of cash-like instruments is more than a tech upgrade. It’s a strategic overhaul of the $7.1 trillion money market industry—and the race to dominate that space is now in full gear.