BNY introduces blockchain record-keeping into institutional fund services

BNY moves fund ownership records to blockchain

Bank of New York Mellon (BNY) has expanded its blockchain strategy by migrating ownership records behind investment funds onto the chain through a new digital transfer agency platform for institutional clients.

Abstract

BNY has launched a blockchain-based transfer agent platform to maintain fund ownership records on the chain. The service will initially support tokenized funds from BlackRock, Baillie Gifford and BNY Dreyfus. BNY's transfer agency business manages approximately US$8.6 trillion in assets, involving 7.6 million investor accounts. The release follows BNY's recent expansion in its U.S. Currency (USDC) services and its cryptocurrency custody business under the European MiCA regulatory framework.

BNY moves fund ownership records to blockchain

BNY does not just tokenize investment products, but applies blockchain technology to the bookkeeping infrastructure that supports fund operations. According to reports, the platform will maintain official ownership records online, creating a shared source of information for all parties involved in fund management. Carolyn Weinberg, BNY's chief product and innovation officer, told media that the project has been modernized by migrating books and records related to fund transactions to the blockchain infrastructure.

The transfer agency is responsible for maintaining the official records of fund investors, processing subscriptions and redemptions, updating the shareholder register, and supporting communication between the fund and investors. These records are often scattered across multiple systems operated by fund managers, custodians and managers, so regular reconciliations are required. By placing records on a shared ledger, BNY aims to reduce the need for a separate database while giving authorized participants access to the same source of ownership information.

BNY's transfer agency business reportedly manages approximately US$8.6 trillion in assets for 7.6 million investor accounts. The bank also independently holds and manages more than $59 trillion in assets.

Early tokenization funds are already using the platform

One of the first institutions to adopt the platform was Edinburgh-based asset manager Baillie Gifford. The company plans to use it for what it calls the UK's first fully native regulated tokenized fund. Theo Golden, Baillie Gifford's head of digital assets, said: "What we have on the blockchain is the source of records shared between participants. We all agree that when people deal with that asset, it's the source of truth for surveillance." The report also stated that BlackRock and BNY Dreyfus's money market funds and cash management businesses are also expected to use the platform for future tokenized fund offerings. According to Baillie Gifford's official website, the company manages approximately US$261 billion in assets.

BNY has not yet identified the blockchain network that will power the new platform. Media contacted the bank seeking comment, but did not receive a response before release.

Digital asset work continues to expand into custody and supervision

The launch of this transfer agency platform is a continuation of a number of digital asset initiatives launched by BNY in recent months. In June, the bank added USDC's casting, redemption, custody and transfer capabilities to its digital asset custody platform, allowing institutional customers to directly access Circle's stablecoins through BNY's infrastructure. The bank is already the main custodian of USDC's reserve assets, and this expansion extends its role from reserve custody to operational stablecoin services. At the time, BNY stated that USDC was the first stablecoin supported by its escrow platform, and that other stablecoins and digital cash workflows would be added in the future. Prior to the announcement, the bank also partnered with the Finstreet and ADI Foundation in Abu Dhabi to host services for Bitcoin and Ethereum development institutions, and plans to subsequently include stablecoins and tokenized real-world assets.

MiCA approves the addition of another regulated digital asset business

The latest blockchain initiative also follows BNY's regulatory expansion in Europe. Earlier this week, the European Securities and Markets Authority added BNY's Belgian subsidiary, BNY SA/NV, to its interim Crypto Asset Markets Act register after obtaining authorization from the National Bank of Belgium. The approval allows the subsidiary to provide crypto asset custody and transfer services in accordance with the EU MiCA Framework. The authorization puts BNY on a par with other European banks and financial institutions that are expanding regulated digital asset operations, as more and more companies complete the licensing process after the MiCA transition deadline. A recent announcement from BNY indicates that the bank is applying blockchain technology to multiple levels of institutional financial infrastructure, including regulated cryptocurrency custody, stablecoin services, and operational bookkeeping systems that support tokenized investment funds.