BNY will begin keeping fund ownership records on blockchain as Wall Street pushes deeper into tokenized assets.
BNY, the biggest bank for asset custody services in the world, is to develop a blockchain-powered variation of the company that will document who holds shares in investment funds, the Financial Times has learned.
The bank’s transfer agency division maintains ownership records across roughly $8.6 trillion in assets and 7.6 million accounts. BNY will keep its traditional system running alongside the new digital service rather than moving the entire business onto blockchain at once, per the report.
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A transfer agent normally sits behind fund purchases and sales, updating investor records and helping process subscriptions and redemptions. Putting that information on-chain gives the bank, asset manager and other participants access to the same ownership record, reducing the need to repeatedly compare separate databases.
BNY says that its solution allows the issuing and management of fund share tokens on public blockchains as well as managing authoritative records off-chain. The product would allow making purchases and redemptions both in fiat and stablecoins.
Tokenized Funds Start Using It
Baillie Gifford, a Scottish asset manager, is already using the service for what it calls the first fully native UK-regulated tokenized fund. Unlike systems that simply create a blockchain copy of a traditional fund share, the token itself serves as the legal ownership record.
BlackRock and Dreyfus, BNY’s money market fund business, are also expected to use the platform for upcoming funds, the report reads.
The launch builds on BNY’s larger expansion into blockchain, which currently includes tokenized money market fund record-keeping, as well as digital custody and tokenized bank deposits.
For instance, earlier in June, the bank signed on as custodian for USAFi, a planned tokenized fund from economist and longtime Bitcoin critic Nouriel Roubini backed by U.S. Treasuries, gold and real estate investment trusts.
