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BNY, the world's largest custodian bank with more than $59 trillion in assets under custody and administration, is moving one of its core record-keeping businesses onto blockchain rails, a signal that Wall Street's long-running flirtation with tokenization is edging into the foundations of the traditional financial system.
The 242-year-old bank is launching a blockchain-based version of its transfer agency business, which services roughly $8.6 trillion in assets across some 7.6 million accounts, the Financial Times first reported. The move is designed to create a single on-chain record of fund ownership, cutting out the need for the multiple intermediaries that currently sit between fund managers and investors.
'Modernizing a function behind every fund transaction'
"We think of BNY as modernizing a function that sits behind every single fund transaction by bringing the books and records onchain," Carolyn Weinberg, BNY's chief product and innovation officer, told the FT.
Transfer agency is the unglamorous plumbing of the asset-management world: the record-keeping function that tracks who owns what share of a fund, processes subscriptions and redemptions, and handles corporate actions. By shifting that ledger onto a blockchain, BNY hopes to eliminate much of the costly reconciliation work that still runs through fund administration and to compress settlement times from days to near-instant.
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Baillie Gifford first in line
Baillie Gifford, a BNY client with more than $261 billion under management, will be the first to use the new service, for what the companies describe as the first fully native U.K.-regulated tokenized fund. BlackRock, the world's largest asset manager, and BNY's own Dreyfus money-market and cash-management unit are also expected to use the blockchain-based system for planned funds.
BlackRock, Franklin Templeton and other major asset managers have already launched tokenized money-market funds in recent years. Those funds hold short-term debt and cash but issue ownership interests as blockchain tokens — an early proof of concept that the same model can now be extended across the broader fund universe.
Old rails will stay
BNY is careful to stress that the traditional system is not going away. The bank will keep its existing transfer agent and says trillions of dollars in funds will remain on existing rails for years, even as the on-chain alternative is built out alongside it.
"We fully recognize you've got trillions and trillions of dollars' worth of funds that ... will continue to exist on traditional rails," said Emily Portney, BNY's global head of asset servicing, the bank's largest business.
That caution reflects the real risks blockchain still carries. Smart-contract bugs, bridge vulnerabilities and the cyber threat surface of distributed ledgers all remain live concerns for institutional adopters, and BNY is betting that a single ownership ledger can replace some reconciliation work without exposing the entire fund stack to those risks at once.
Wall Street's blockchain offensive
BNY's move is the latest in a broader Wall Street push onto blockchain infrastructure. JPMorgan, Citi and Bank of America have outlined plans to build a shared, tokenized deposit network by the first half of 2027, an effort partly aimed at protecting their deposits from the competitive threat posed by stablecoins.
Edwin Mata, CEO and founder of tokenization platform Brickken, estimates that Wall Street will run entirely on blockchain technology by 2030 — an aggressive forecast, but one that BNY's decision to put $8.6 trillion of transfer-agency assets on-chain makes look slightly less far-fetched than it did a year ago.
A long coexistence
For now, the message from BNY is one of coexistence: the old system stays, the new system runs alongside it, and the bank earns fees on both. But the direction of travel is clear. Every fund BNY services — every share ledger, every corporate action, every investor record — is now, at least in principle, a candidate for a blockchain-native future.
