One of the world’s largest custodial banks is making a decisive move toward blockchain-based finance.
BNY, which oversees $57.8 trillion in assets under custody, has announced that institutional clients can now move deposits using blockchain infrastructure, effectively bringing core banking functions onto on-chain rails.
Key takeaways:
BNY is enabling on-chain transfers of bank deposits for institutional clients
Tokenized deposits can be used for collateral, margin, and payments on a 24/7 basis
Early users include ICE, Citadel Securities, DRW, Ripple Prime, Baillie Gifford, and Circle
The move positions tokenized deposits as a settlement layer for always-on markets
The new system allows deposits to be transferred and used continuously for collateral management, margin requirements, and payments, with BNY aiming to support full 24/7 functionality. Among the first institutions to adopt the service are Intercontinental Exchange, Citadel Securities, DRW Holdings, Ripple Prime, asset manager Baillie Gifford, and stablecoin issuer Circle.
ANNOUNCEMENT: BNY selected to serve as the primary reserve custodian of @Ripple’s enterprise-grade stablecoin, Ripple USD (#RLUSD).
#BNY and Ripple are jointly committed to paving the way for digital asset adoption at institutional scale and together are helping to bridge the… pic.twitter.com/RjyDyBj0Qk— BNY (@BNYglobal) July 9, 2025
According to BNY’s leadership, the goal is not to disrupt banking but to extend it. The bank describes the initiative as a way to link established financial infrastructure with blockchain-based systems in a format that large institutions recognize and trust.
What Makes Tokenized Deposits Different
Tokenized deposits are often confused with stablecoins, but they operate under a different model. Stablecoins are typically backed by pools of cash or short-term government securities held outside the traditional banking system. Tokenized deposits, by contrast, remain inside regulated banks and represent actual customer deposits that can earn interest.
This distinction is becoming more relevant following the passage of the GENIUS Act in the United States, which established a clearer regulatory framework for stablecoins and accelerated discussions around alternative forms of digital money within the banking system.
Building the Rails for 24/7 Markets
BNY sees blockchain-based deposits as a foundational layer for tokenized financial assets, including stocks and bonds. Instead of relying on batch settlement and restricted banking hours, tokenized deposits could allow trades to settle continuously, aligning with markets that never close.
ICE plans to integrate tokenized deposits across its clearinghouses as it prepares for continuous trading models. The company has previously argued that tokenization could increase market activity by enabling real-time collateral movement and reducing capital friction.
Another advantage highlighted by BNY is programmability. Tokenized deposits can be configured to execute automatically when predefined conditions are met, such as releasing collateral the moment a loan is repaid or settling margin calls instantly when thresholds are reached.
Traditional Banks Accelerate Blockchain Adoption
BNY is not acting in isolation. Major banks are increasingly experimenting with on-chain representations of deposits. JPMorgan Chase has already deployed JPM Coin for institutional payments, while HSBC plans to expand its tokenized deposit offerings to the US and the UAE this year.
In Europe, Barclays recently invested in Ubyx, a startup focused on clearing infrastructure for tokenized deposits. Meanwhile, UBS, PostFinance, and Sygnum Bank have all conducted blockchain-based settlement tests, while SWIFT continues to build on-chain settlement capabilities.
Taken together, these moves point to a broader shift. Rather than competing with crypto-native money, banks are increasingly adapting blockchain technology to modernize their own balance-sheet-based instruments. BNY’s launch suggests that tokenized deposits may become a central bridge between traditional finance and always-on digital markets, rather than a niche experiment on the sidelines.
