World’s biggest custodian bank BNY will provide tokenized deposit services to institutional clients

BNY Embraces Blockchain for Institutional Deposits

BNY, recognized as the largest custodial bank globally, has made a significant move into the world of tokenization by enabling institutional clients to settle deposits using blockchain technology.

With assets under management approaching $58 trillion, BNY is introducing a new platform that reflects client deposit balances on a private blockchain. This initiative aims to accelerate settlement times and enhance liquidity management, according to a recent announcement.

This development follows BNY’s ongoing efforts to modernize its payment systems. Last year, the bank revealed it was experimenting with tokenized deposits as part of a broader strategy to upgrade its global payments infrastructure.

Carolyn Weinberg, BNY’s chief product and innovation officer, explained, “Tokenized deposits allow us to extend our trusted banking services onto digital platforms, giving clients faster access to collateral, margin, and payments, all within a scalable and regulatory-compliant environment.”

Tokenization refers to the process of transforming real-world assets into digital tokens on a blockchain.

Enabling 24/7 Settlement

BNY’s Digital Assets platform now offers institutional clients the ability to represent their deposit claims as blockchain-based entries. These tokenized balances are intended to simplify and speed up processes related to collateral and margin—areas that demand rapid and dependable fund transfers.

The system utilizes a permissioned blockchain managed by BNY and operates under the bank’s established risk and compliance protocols.

Despite this innovation, BNY will continue to maintain official records of client balances on traditional ledgers to remain compliant with regulatory standards.

BNY is not alone in this shift. A growing number of financial institutions are moving away from legacy systems that only function during business hours, opting instead for digital solutions capable of settling transactions at any time.

For example, JPMorgan recently launched its JPMD token on Coinbase’s Base blockchain. Meanwhile, in Europe, a consortium of nine banks is collaborating to issue a MiCA-compliant euro stablecoin.