BNY is rolling out a Digital Transfer Agent offering alongside its conventional one that is used to service around $8.6 trillion in assets, with the aim of supporting digitally native fund tokens. Banks and asset managers that have launched DLT-based transfer agency solutions have boasted of massive cost savings.
The bank already offers institutions the ability to tokenize existing funds on its permissioned blockchain, but that amounts to a digital twin. Funds are increasingly being issued directly onto permissionless blockchains in a natively digital format, and the coming push to use money market funds as tokenized collateral will only increase that momentum. Creating a single source of ownership avoids the need to reconcile between the conventional and token representation, never mind potential legal complexities about which version actually represents ownership.
“Digital Transfer Agency capabilities represent the next evolution of fund servicing, combining the same operational rigor, transparency and trust of traditional services paired with the future of innovation in digital markets,” said Carolyn Weinberg, Chief Product and Innovation Officer at BNY.
The solution will support stablecoins and fiat to settle issuance and redemption. BNY plans to use the solution for a new digitally native money market fund from BNY Investments Dreyfus, BLIQUID. Baillie Gifford co-designed the offering which was used in its recently launched UK digitally native fund on Ethereum and Solana. It is expected that BlackRock will deploy it for its previously announced digital share class of a fund targeting stablecoin issuers, BSTBL. The BlackRock case exemplifies why the new digital solution is essential. The asset manager already uses Securitize as digital transfer agent for BUIDL and is rolling out a further digitally native fund with the firm.
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