JPMorgan Chase is calling Goldman Sachs and BNY Mellon’s new partnership a game-changer for money market funds. The collaboration will use blockchain technology to create tokenized versions of these funds.
A Blockchain Boost for Money Market Funds
Goldman and BNY Mellon are teaming up to launch a service that uses a Goldman-developed blockchain to tokenize money market funds. Several major players are on board, including BlackRock, BNY Investments Dreyfus, Federated Hermes, and Fidelity Investments.
More Than Just Cash Management
According to JPMorgan managing director Teresa Ho, this move is huge because it opens up new possibilities for money market funds. Instead of just being a place to park cash, these tokenized funds can now be used as collateral. This means companies can use them as security for loans without losing out on interest, making them much more versatile.
A Wave of Tokenization
Ho also points out that many financial institutions are seeing the potential of tokenization, especially with regulations becoming clearer. She expects to see more developments in this area, including more stablecoins being used within the traditional financial system and more real-world assets being tokenized.