BNY Mellon to launch blockchain platform for $8.6 trillion in fund records

BNY Mellon, the world’s largest custodian bank, has announced a major move towards adopting blockchain technology in its core operations by shifting fund ownership records to an onchain platform.

Blockchain initiative for fund management

The bank, based in New York City, plans to introduce a blockchain-powered version of its transfer agency business. Transfer agents are responsible for maintaining records of fund ownership and handling investor transactions in mutual funds and similar investment vehicles.

Carolyn Weinberg, BNY Mellon’s chief product and innovation officer, emphasized the institution’s focus on modernizing the critical processes behind fund management. She explained that moving the books and records onchain will update a core function that underpins every fund transaction.

BNY Mellon’s strategy centers on modernizing a process that supports all fund transactions by adopting onchain recordkeeping for books and records.

This shift is part of BNY Mellon’s broader digital asset strategy, which includes compliance with the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework. The bank aims to prepare for broader institutional adoption of blockchain technology.

Currently, BNY Mellon’s transfer agency services oversee $8.6 trillion in assets and serve 7.6 million accounts. The company, which supervises over $59 trillion in overall assets under custody and administration, confirmed it will continue offering its traditional transfer agency services alongside the new blockchain-based offering.

Transfer agents traditionally rely on multiple recordkeeping systems, often causing inefficiencies as fund managers, custodians, and other participants must frequently reconcile records across different platforms.

By transitioning to an onchain model, BNY Mellon seeks to streamline this process by establishing a single, shared ledger accessible to market stakeholders.

Mini dictionary: Transfer agent, a financial service provider responsible for maintaining the official records of investors’ holdings in a fund, processing subscriptions and redemptions, and facilitating reporting and communication between funds and their investors.

Early adopters and future plans

BNY Mellon confirmed that early adopters of the digital platform will include Baillie Gifford, the Edinburgh-based asset manager, which manages approximately $261 billion in assets. Baillie Gifford intends to pilot what it describes as the first “fully native” tokenized fund regulated in the United Kingdom using BNY Mellon’s new technology. Industry giants BlackRock and BNY Dreyfus are also expected to utilize the service for their upcoming tokenized funds.

Baillie Gifford’s digital assets lead, Theo Golden, described the platform’s shared ledger as a vital source of truth for all participants. He noted that relying on a unified blockchain record ensures all parties agree on the underlying asset data during transactions.

Theo Golden pointed out that blockchain provides a reliable, shared ledger, enabling transparent and agreed-upon asset monitoring among all market participants.

Details regarding which blockchain network will host the records have not yet been disclosed by BNY Mellon. The bank did not provide further comment on its technical choices as of the latest update.

These developments occur as other global financial institutions explore blockchain solutions for recordkeeping, with interest accelerating among both private firms and regulators.