Bank of New York Mellon is reportedly investigating the use of tokenized deposits to facilitate client payments through blockchain technology.
As part of an initiative to modernize its technological infrastructure, the bank is considering implementing this innovation, particularly within its treasury services division, which processes approximately $2.5 trillion in payments daily. According to a report by Bloomberg on Tuesday, October 7th, the information came from an interview with Carl Slabicki, the Executive Platform Owner for Treasury Services at BNY.
Slabicki explained to Bloomberg that tokenized deposits have the potential to assist “banks in overcoming challenges associated with older systems,” streamlining the movement of deposits and payments within their own systems, and potentially, across the wider financial landscape as industry standards evolve.
Previously, in July, BNY announced a separate tokenization project in collaboration with Goldman Sachs. The partnership aimed to utilize Goldman Sachs’ blockchain platform to accurately track customer ownership of specific money market funds.
According to a press release issued at the time, this collaboration represents “a substantial advancement in improving the usefulness and transferability of existing MMF shares.”
In September 2024, PYMNTS reported that tokenized deposits function as digital representations of actual fiat currency, differing from stablecoins that are simply backed by fiat reserves.
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At that time numerous financial institutions, including regulatory bodies, banking groups, and individual banks, had revealed pilot initiatives and exploratory programs designed to assess the practical application of these deposits, settled directly in central bank funds.
JPMorgan Chase announced in June its intention to introduce a ”
deposit token,” designed as a digital counterpart to commercial bank money, exclusively available to the bank’s institutional clientele.
These tokens, known as JPMD, are created by JPMorgan and delivered to participating institutional clients through smart contract transactions on the Base public blockchain network.
HSBC announced in September the expansion of its tokenized deposit service to encompass cross-border transactions for its corporate clients. The bank completed its initial U.S. dollar cross-border transactions earlier that month, between Hong Kong and Singapore.
HSBC had previously launched its Tokenized Deposit System (TDS) for domestic payments in Hong Kong and Singapore earlier in the year, and subsequently extended it to the United Kingdom and Luxembourg, supporting local payments in additional currencies.