The world’s largest custodial bank has launched a new blockchain-based platform that allows institutional clients to represent bank deposits in tokenized form, marking a significant step in the integration of traditional banking with digital settlement infrastructure. The initiative mirrors existing client deposit balances on a private blockchain, enabling faster settlement and more efficient liquidity management while keeping the underlying funds within the regulated banking system. With nearly $58 trillion in assets under custody and administration, BNY is positioning tokenized deposits as an institutional-grade alternative to existing payment and collateral workflows. The move reflects growing demand among large financial institutions for around-the-clock settlement capabilities that legacy systems cannot provide, particularly as markets increasingly operate across time zones and asset classes without interruption.
The platform is live on BNY’s digital assets infrastructure and allows institutional clients to use tokenized representations of their deposits for collateral, margin, and payment purposes. While balances are mirrored on a permissioned blockchain controlled by the bank, the actual deposits continue to be recorded on traditional ledgers to maintain full regulatory compliance. This structure is designed to combine the speed and programmability of blockchain rails with the safety and oversight of regulated bank deposits. The initiative follows earlier testing efforts as BNY explored how tokenization could modernize its global payment settlement processes. By focusing on deposits rather than issuing a standalone stablecoin, the bank is offering a model that keeps liquidity inside the banking system while still delivering many of the benefits associated with onchain settlement.
The launch aligns with a broader industry shift as major banks move toward tokenized money and continuous settlement infrastructure. Financial institutions are increasingly seeking alternatives to systems that operate only during business hours, especially as tokenized assets and digital markets grow. Tokenized deposits are emerging as a complementary instrument to stablecoins, particularly for institutions that require regulatory certainty and direct claims on bank balances. BNY’s move highlights how traditional finance is adopting blockchain technology not as a replacement for banks, but as an extension of existing financial plumbing. As tokenization expands across deposits, securities, and other real world assets, initiatives like this point toward a future where digital rails support core banking functions at institutional scale.
