BNY Mellon Reviewing Tokenized Deposits for Blockchain Payments

The Bank of New York Mellon, the world's largest custodian bank, is reportedly considering tokenized deposits to support blockchain-based payments. This is part of a digital finance modernization strategy aimed at transitioning to next-generation payment infrastructure such as real-time payments and cross-border transfers.

According to Bloomberg on the 7th (local time), BNY Mellon is reviewing tokenized deposits. Carl Slabicki, head of Mellon's financial services division, said, "This review is part of efforts to overcome the technical constraints of existing payment infrastructure and to strengthen real-time and global payment capabilities."

Tokenized deposits are a digital form of deposit coins issued by commercial banks; they can be traded 24/7 over blockchain networks and enable immediate settlement without intermediaries. BNY Mellon processes about $2.5 trillion in payments on average per day and manages approximately $55.8 trillion in assets.

This move aligns with a trend of global banks experimenting with 'digital deposit tokens.' JPMorgan demonstrated a proof of concept (PoC) for a U.S. dollar deposit token called 'JPMD' in June, and HSBC has launched tokenized deposit services for corporate clients. The international payments messaging network SWIFT is also building a blockchain-based shared ledger system.

BNY Mellon has been active this year in digital asset infrastructure. In July it introduced a system, in collaboration with Goldman Sachs, to tokenize and manage money market fund (MMF) holdings. This review of tokenized deposits is an extension of these efforts and a strategic attempt to operate on-chain cash flows alongside existing tokenized assets.

Slabicki said, "Deposit tokens will first be within the bank's internal ecosystem, then expand industry-wide and become standardized," adding, "This change will ultimately be key to overcoming the constraints of legacy systems."