BNY launched blockchain-based transfer agency services on Wednesday, moving core fund record-keeping functions for up to $8.6 trillion in assets onto digital infrastructure as the world's largest custodian bank accelerates Wall Street's shift towards tokenised financial markets.

The new Digital Transfer Agency platform extends BNY's existing transfer agency business to support digitally native investment funds while continuing to operate alongside its traditional systems. The bank, which oversees $59.4 trillion in assets under custody and administration, said the platform provides a single blockchain-based record of ownership intended to reduce reconciliation between multiple intermediaries and support faster settlement.

Emily Portney, global head of asset servicing at BNY, said: "With this new capability, BNY is helping power the future of financial markets through digital market infrastructure with a global, scalable platform that integrates tokenization, distribution, and custody." She added that the bank would continue supporting conventional infrastructure because "trillions and trillions of dollars' worth of funds" will remain on traditional financial networks for years.

According to the Financial Times, Wall Street institutions including BlackRock and Franklin Templeton have already launched tokenised money market funds, while major exchanges and banks are expanding blockchain initiatives to modernise financial market infrastructure. Asset managers expect tokenisation to shorten settlement times, reduce operational costs and enable continuous trading through shared digital records.

BNY said the service will initially launch with selected clients in the United States and United Kingdom. Early adopters include Edinburgh-based Baillie Gifford, which has launched what it described as the first publicly available UK-regulated fully native tokenised fund using the platform, while BNY Investments Dreyfus and BlackRock are expected to introduce tokenised money market products using the new capabilities.

Carolyn Weinberg, chief product and innovation officer at BNY, said: "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." She added that the platform would make "asset servicing and mobility easier" as fund managers introduce more digital investment products.

The Financial Times reported that blockchain adoption across traditional finance remains at an early stage despite growing regulatory clarity in the United States, with institutions expected to operate digital and conventional infrastructure in parallel for the foreseeable future.

Industry participants have previously noted that blockchain networks introduce cyber security considerations, including risks linked to smart contracts and connections between different blockchain networks.

---