Bank of New York Mellon (BNY) has launched its tokenized deposit offering, targeting tokenized collateral and margin payments. The Intercontinental Exchange (ICE) is one of the early adopters alongside Citadel Securities, DRW and stablecoin issuer Circle. BNY is the world’s largest custodian with $57.8 trillion in assets under custody.
The initiative has been a work in progress for the bank for several years. Since 2023, BNY has participated in Singapore’s Project Guardian where it has been testing the interoperability of tokenized deposits and FX with OCBC Bank. The BNY CEO recently highlighted the digital asset opportunity, noting BNY’s role servicing stablecoin issuers. However, he made clear the bank had no plans to issue a stablecoin itself, instead focusing on tokenized deposits as its blockchain payments strategy. Other web3 firms involved in the tokenized deposit launch include stablecoin issuers Anchorage Digital and Paxos, as well as Galaxy, Ripple Prime, Securitize, Talos and Zerohash.
BNY described the tokenized deposits as “onchain mirrored” representations of client deposit balances on its permissioned Digital Assets platform. Apart from on chain settlement in near realtime and availability 24/7, tokenized deposits benefit from programmability. However, this latter aspect is not yet available.
This technical architecture distinguishes tokenized deposits from stablecoins, a difference that matters significantly for institutional adoption. While stablecoins are fully backed by securities and can move between anonymous people, tokenized deposits are part of fractional banking, are only available to the bank’s clients, and can potentially earn interest. JP Morgan was the first to launch tokenized deposits with its Kinexys Digital Payments, while Citi went live in 2024. Since the passage of the US GENIUS Act for stablecoins, tokenized deposit initiatives have accelerated, with other global systemically important banks launching offerings including Deutsche Bank, HSBC and Standard Chartered. Beyond the GENIUS Act, several other regulatory developments are driving demand for tokenized deposits.
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