BNY Mellon Explores Tokenized Deposits to Modernize $2.5 Trillion Payment Infrastructure

Bank Pushes Blockchain Settlement as Traditional Rails Struggle with Speed and Cross-Border Efficiency

TL;DR:

• BNY Mellon is testing tokenized deposits to upgrade its $2.5 trillion daily payments network.
• The bank sees blockchain as key to overcoming legacy bottlenecks and enabling 24/7 transfers.
• Global peers including JPMorgan, HSBC, and SBI are pursuing similar blockchain deposit systems.

BNY Mellon, the world’s oldest bank, is evaluating tokenized deposits as part of an ongoing effort to rebuild its payments infrastructure on blockchain rails, according to executives and public filings dated October 7, 2025. The initiative, led by Carl Slabicki, co-head of Global Payments, aims to migrate portions of the bank’s roughly $2.5 trillion in daily payment flows onto distributed-ledger technology that can support instant settlement and continuous liquidity across jurisdictions. Slabicki said the goal is to “help banks overcome legacy technology constraints, making it easier to move deposits and payments across their own ecosystems — and eventually, across the broader market.”

Tokenized deposits represent digital tokens fully backed one-to-one by commercial bank money, meaning each unit reflects a direct claim on bank reserves rather than the mixed collateral structure that underpins many stablecoins. This structure could enable faster settlement, interoperability between banks, and lower friction in international payments while maintaining regulatory oversight. BNY Mellon’s Treasury Services division is experimenting with these instruments through internal pilots rather than a public rollout, focusing on real-time reconciliation between traditional ledgers and blockchain records.

The project expands on a series of tokenization experiments across BNY Mellon’s asset and liquidity businesses. In July 2025, the bank joined Goldman Sachs to introduce “mirror tokens” tied to money-market fund shares, allowing institutional clients to subscribe and redeem through tokenized representations on Goldman’s private blockchain, GS DAP. That system operates alongside BNY’s LiquidityDirect platform and is backed by major asset managers including BlackRock, Fidelity, Federated Hermes, and BNY Investments Dreyfus. Rather than replacing existing settlement systems, it runs as a parallel ledger — a sandbox model designed to validate operational efficiency and compliance workflows before broad adoption.

BNY Mellon also extended its footprint into tokenized Treasuries in August 2025, when its Singapore affiliate was appointed custodian and investment manager for OpenEden’s tokenized U.S. Treasury fund, which manages roughly $287 million in assets. The appointment followed a Moody’s reassessment of the fund’s “A-bf” rating after a temporary downgrade, with the rating agency citing BNY’s involvement as a stabilizing factor. These moves align with the bank’s wider digital asset custody strategy, bridging tokenized securities and on-chain fund administration under the same operational roof.

Peer institutions are advancing on parallel tracks. JPMorgan’s tokenized deposit pilot, dubbed “JPMD,” went live earlier this year to test intraday settlements between corporate clients. HSBC recently launched a similar system for cross-border corporate payments, while Japan’s SBI, Shinsei Bank, and DeCurret joined Singapore’s Partior to pilot multicurrency tokenized deposits with real-time clearing. BNY Mellon is also among more than 30 financial institutions collaborating with SWIFT on a shared blockchain ledger for instant international transfers, underscoring the industry’s convergence around distributed settlement frameworks.

Executives view the shift as a measured but inevitable modernization of the payments stack. The crypto price index and broader coin market cap trends highlight how institutional interest in blockchain applications has decoupled from short-term crypto price volatility, with major custodians increasingly treating digital settlement as core infrastructure rather than speculative exposure. Analysts say tokenized deposits could offer the compliance and scalability missing from stablecoins while maintaining the programmable advantages that define blockchain-based money.

Regulators and technologists still face hurdles around interoperability, legal finality, and cross-jurisdictional recognition. Internal reconciliation between token layers and core banking ledgers remains a technical challenge, particularly under complex regulatory frameworks. Yet the pace of development signals a clear direction: traditional banks are not waiting for retail crypto markets to mature before rebuilding their financial plumbing. As tokenization reshapes global finance from treasuries to money-market funds, BNY Mellon’s experiment stands as another step toward a programmable future for regulated deposits — one measured not just in crypto price movements but in the evolving architecture of money itself.

This article has been refined and enhanced by ChatGPT.