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 rollout includes major asset managers such as BlackRock, BNY Mellon Investment Management’s Dreyfus, Federated Hermes, Fidelity Investments, and Goldman Sachs Asset Management.
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.
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.
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.
“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.
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.
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