The collaboration supports the tokenization of money market funds assets and the transferability of existing MMF shares.
The Bank of New York Mellon Corp. (BNY) and the Goldman Sachs Group, Inc. have begun a collaboration that requires BNY to use blockchain technology developed by Goldman Sachs to maintain a record of customers’ ownership of select money market funds (MMFs), representing an enhancement of “the utility and transferability of existing MMF shares,” officials say.
“A money market fund is a mutual fund that invests in short-term, liquid debt instruments, offering high liquidity and low risk while maintaining a stable $1 per share net asset value,” according to the website Investopedia.
“This combined solution marks the first time in the U.S. that fund managers have enabled subscription for shares of their MMFs via BNY’s LiquidityDirect and digital asset platforms, the corresponding value of which will be represented through mirrored record tokenization” via the Goldman Sachs Digital Asset Platform (DAP), according to the announcement.
BNY officials will maintain the official books, records, and settlements for the funds “within currently approved guidelines,” officials say.
BlackRock, BNY Investments Dreyfus, Federated Hermes, Fidelity Investments, and Goldman Sachs Asset Management (GSAM) will participate in the next steps of this effort, officials add.
“Using tokens representing the value of shares of money market funds on GS DAP would enable us to unlock their utility as a form of collateral and open up more seamless transferability in the future,” says Mathew McDermott, global head of digital assets at Goldman Sachs, in a prepared statement.
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