BNY Integrates Blockchain for Institutional Fund Recordkeeping

BNY Introduces Blockchain Transfer Agency Platform

BNY has announced an expansion of its blockchain strategy by launching a new digital transfer agency platform aimed at maintaining fund ownership records on a blockchain. This innovative solution will initially support tokenized funds from Baillie Gifford, BlackRock, and BNY Dreyfus.

Improving Fund Operations with Onchain Records

As part of its initiative, BNY aims to modernize the record-keeping infrastructure that underpins fund operations. The platform allows for official ownership records to be stored on a shared digital ledger, facilitating a unified source of information for all parties involved in fund administration.

Carolyn Weinberg, BNY’s Chief Product and Innovation Officer, emphasized that the project represents a significant move towards digitizing the fundamental books and records associated with fund transactions. Traditionally, these records are maintained across numerous systems operated by fund managers and custodians, necessitating regular reconciliations. By employing a blockchain solution, BNY plans to significantly reduce the reliance on separate databases and provide authorized participants direct access to the same ownership data.

Early Adoption by Major Asset Managers

The platform is already being utilized by Baillie Gifford, based in Edinburgh, which is gearing up to launch what it calls the UK’s first fully native regulated tokenized fund. Theo Golden, head of digital assets at Baillie Gifford, remarked,

“What we have in the blockchain is a shared source of record-keeping between the participants. We agree that this is the source of truth when people are dealing with the asset that this is monitoring.”

Additionally, BlackRock and BNY Dreyfus are expected to leverage this technology for future tokenized fund offerings.

Expanding Digital Asset Services and Regulatory Compliance

BNY’s recent initiative follows their introduction of USDC services and MiCA-regulated crypto custody in Europe. This expansion builds on previous efforts, such as adding USDC minting, redemption, custody, and transfer capabilities to its Digital Asset Custody platform.

Moreover, the European Securities and Markets Authority recently included BNY SA/NV, its Belgian subsidiary, in the interim Markets in Crypto-Assets register, thus allowing the bank to offer crypto-asset custody and transfer services in line with EU regulations.

Conclusion

The launch of BNY’s blockchain-based transfer agency underscores the bank’s commitment to integrating innovative technology within institutional financial services. By enhancing the transparency and efficiency of fund recordkeeping, BNY is positioning itself at the forefront of the evolving digital asset landscape.