BNY is moving its transfer agency onto blockchain, with Baillie Gifford and BlackRock as early clients. The bank sees a single ownership ledger cutting reconciliation costs for fund administration.
BNY, the 242-year-old custody bank with $59 trillion in assets under custody and administration, is moving its transfer agency business onto blockchain, the Financial Times reported Thursday.
The bank's transfer agency services about $8.6 trillion in assets across 7.6 million accounts. Moving that record-keeping onchain creates a single ownership ledger, cutting out the need for multiple intermediaries, said Carolyn Weinberg, chief product and innovation officer.
"We think of BNY as modernizing a function that sits behind every single fund transaction by bringing the books and records onchain," Weinberg told the FT.
Emily Portney, BNY's global head of asset servicing, said the bank recognizes that trillions of dollars in funds will continue to exist on traditional rails for years. BNY will keep its traditional transfer agent alongside the new blockchain-based service.
Baillie Gifford, a BNY client with more than $261 billion under management, will use the service for what the companies describe as the first fully native U.K.-regulated tokenized fund, according to the FT. BlackRock and Dreyfus, BNY's money-market and cash-management business, are expected to use it for planned funds.
BlackRock, Franklin Templeton and other asset managers have already launched tokenized money-market funds. Those funds hold short-term debt and cash but issue ownership interests as blockchain tokens.
Edwin Mata, CEO of tokenization platform Brickken, estimates that Wall Street will run entirely on blockchain technology by 2030. America's biggest banks, including JPMorgan, Citi and Bank of America, plan to build a shared tokenized deposit network by the first half of 2027 to protect deposits from stablecoins.
Among the banks in that consortium, JPMorgan and Bank of America carry Alpha Scores of 66 and 69, respectively, both rated Moderate by AlphaScala. Their stock pages are JPM and BAC.
BNY's bet is that a single ownership ledger can replace some of the costly reconciliation work that still runs through fund administration. The bank does not expect the old system to disappear. Blockchain also brings cyber risks, including bugs in smart contracts and bridges linking networks, the FT noted.
The shift could reduce reconciliation costs for asset managers, the FT reported.
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