Wall Street giants are focusing on digital assets: Goldman Sachs Group, Inc. (GS.US) is teaming up with New York TrustCo Bank Corp NY (BK.US) to launch a $7.1 trillion tokenized currency market fund channel.

Goldman Sachs Group, Inc. (GS.US) and New York TrustCo Bank Corp NY (BK.US) are about to announce a groundbreaking partnership: the two institutions have created a new channel for professional investors to purchase tokenized money market funds. The management of these two financial giants revealed that clients of New York TrustCo Bank Corp NY, as the world's largest custody bank, will be able to record ownership of fund shares through Goldman Sachs Group, Inc.'s blockchain platform and directly invest in money market funds. This project has attracted top asset management institutions such as BlackRock, Inc., Fidelity Investments, and Lianbo Fund, as well as asset management subsidiaries of Goldman Sachs Group, Inc. and New York TrustCo Bank Corp NY. After President Trump signed the GENIUS Act last week to establish a regulatory framework for stablecoins, Wall Street giants believe that tokenizing the $7.1 trillion money market will be the next milestone in the development of digital assets. The act is expected to promote the widespread use of stablecoins pegged to the US dollar, with JP Morgan Chase, Citigroup, and Bank of America Corp already exploring their applications in the payments field. Unlike stablecoins, tokenized money market funds can generate returns for holders, making them attractive to hedge funds, pension funds, and corporate cash management. Laide Majiyagbe, head of global liquidity, financing, and collateral at New York TrustCo Bank Corp NY, said: "We have created the ability for clients to invest in tokenized money market fund shares across multiple fund companies. The significance of tokenization lies in the ability to achieve seamless and efficient transactions, eliminating the frictions of traditional markets." Money market funds primarily invest in short-term secure assets such as government bonds, repurchase agreements, and commercial paper, considered as investment tools with both cash liquidity and income characteristics. Although traditional money market funds can be liquidated within a day or two, redemption operations are only allowed during trading hours. Since the Federal Reserve began its rate hike cycle in 2022, institutions and individual investors have injected around $2.5 trillion into this asset class. Revolutionary Upgrade By creating digital ownership certificates for money market funds via blockchain technology, the innovation by Goldman Sachs Group, Inc. and New York TrustCo Bank Corp NY will enable faster settlements, round-the-clock trading, and automated processing. For a smooth transition, New York TrustCo Bank Corp NY will still maintain traditional money market records on top of tokenized assets. By creating digital ownership certificates for money market funds residing on the blockchain, the initiatives by Goldman Sachs Group, Inc. and New York TrustCo Bank Corp NY will enable faster settlements, round-the-clock trading, and automation. To simplify the transition, New York TrustCo Bank Corp NY will also maintain traditional money market records on top of tokenized assets. Banks believe that tokenized funds lay the foundation for asset trading in a more efficient and always-online digital ecosystem in the future. Investors and businesses can rely on stablecoins for global payments and utilize tokenized money market funds for cash management. Tokenizing asset classes has given funds new functionalities surpassing speed and user-friendliness; New York TrustCo Bank Corp NY and Goldman Sachs Group, Inc. stated that digitalized funds can ultimately be transferred between financial intermediaries without the need to first settle the funds into cash. Mathew McDermott, Global Head of Digital Assets at Goldman Sachs Group, Inc., pointed out that tokenization presents new possibilities for this asset class beyond trading efficiency: digital funds can flow directly between Financial Institutions, Inc. without the need to cash out, enhancing their utility as collateral and margin for bulk trades. "The immense scale of this market creates significant space for improving financial infrastructure efficiency," McDermott emphasized, "its strength lies in creating unprecedented practical value within existing tools." For example, enterprises can transfer tokens directly instead of selling funds to obtain trading margins, thereby releasing time and capital tied up by traditional trades.