The growing intersection between traditional finance and digital asset infrastructure has taken another step forward, as Goldman Sachs and BNY Mellon announced a joint initiative aimed at integrating blockchain technology into the money market fund (MMF) ecosystem.
The collaboration will see BNY Mellon leverage Goldman Sachs’ GS DAP® (also known as its private blockchain) to maintain a mirrored tokenized record of customer ownership in select MMFs. This marks the first instance in the United States where mirrored tokenization will be used to reflect ownership in MMFs through a blockchain-based ledger.
The rollout includes major asset managers such as BlackRock, BNY Mellon Investment Management’s Dreyfus, Federated Hermes, Fidelity Investments, and Goldman Sachs Asset Management.
Investors will now be able to subscribe to and redeem MMF shares using BNY’s Liquidity management platform, which has been integrated with its digital assets platform to connect with the private blockchain.
The mirror tokens created on the Goldman Sachs’ private blockchain platform do not replace official records but serve as a complementary layer that increases the accessibility and potential use cases of MMF shares in a digitized financial ecosystem.
Blockchain Integration to Expand MMF Utility
The mirrored tokenization of MMF shares using blockchain represents a new model for fund management infrastructure. Although the underlying assets remain managed through traditional custodial and compliance channels, the blockchain layer enhances interoperability and real-time transferability.
Goldman Sachs’ GS DAP®, is built on smart contract technology from the startup Digital Asset and offers programmable finance functionality for institutions.
BNY Mellon’s LiquidityDirectSM platform is also one of the leading portals for institutional cash investors, and the integration of the private blockchain opens the door to extending MMF shares into use cases like collateral optimization and intraday liquidity management.
According to Laide Majiyagbe, BNY Mellon’s Global Head of Liquidity, Financing and Collateral, “Mirrored tokenization of MMF shares is a first step in this transition,” noting the company’s position as a link between established financial systems and new technology.
GS DAP® was previously piloted for bond issuance on blockchain networks in Asia and Europe. Its adaptation for MMF share representation in the US signals a broader vision for tokenizing real-world assets beyond equities and debt, potentially reshaping capital markets infrastructure.
This particular use case focuses on liquidity and settlement efficiency in short-term investment vehicles, valued at over $7 trillion globally, according to ICI data.
A Step Toward Collateral Utility and Global Scalability
Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, emphasized the potential benefits of using tokenized MMF shares as collateral in various trading and settlement contexts.
“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,” he said in a statement.
BNY Mellon will continue to serve as the official recordkeeper, maintaining existing regulatory compliance and settlement protocols. However, the addition of tokenized mirrors creates new flexibility for financial institutions seeking to modernize collateral management and liquidity strategies.
While this initiative currently focuses on US MMFs, both institutions signaled interest in expanding the model globally, potentially applying similar technology to other fund structures and asset classes.
Featured image created with DALL-E, Chart from TradingView
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