BNY, the world's largest custody bank, and Citadel Securities completed a transaction using tokenized U.S. Treasuries on Tuesday, demonstrating how blockchain technology could help Wall Street move assets between trading and financing more quickly.
The transaction focused on collateral, a fundamental component of financial markets. Banks and trading firms use U.S. government bonds to secure short-term loans and fund trading activity. Moving those bonds between accounts and settlement systems currently takes time, tying up assets that could otherwise be deployed for other purposes.
The aim was to show how tokenized government bonds could move from settlement into financing, potentially allowing firms to reuse collateral sooner and free up cash for additional trades.
Broader industry adoption
The effort reflects Wall Street's broader exploration of bringing traditional assets onto blockchains. Major financial firms including BlackRock, Franklin Templeton, and JPMorgan have embraced tokenized funds and securities, betting the technology can shorten settlement times, automate processes, and make assets easier to move.
Dan Doherty, digital assets operations lead at Citadel Securities, said in a statement that efficient movement of high-quality collateral is fundamental to well-functioning markets, and that reducing delays across the trade lifecycle could improve how institutional markets operate.
BNY's expansion plans
BNY said it plans to introduce more digital cash and tokenized deposit capabilities to support blockchain-based settlement and financing. The bank also expects to extend the operating hours of its traditional settlement systems for Federal Reserve-eligible securities and U.S. triparty transactions, aiming to reach European and Asian trading hours next year.
Carolyn Weinberg, chief innovation and market transformation officer at BNY, said the tokenized Treasury transaction enables a more connected, efficient, and always-on financial system.
