Goldman Sachs & BNY Mellon Tokenize Money Market Fund – Mirrored Approach
Key Content
- The $7 Trillion Opportunity – Why Goldman Sachs and BNY Mellon are bringing money market funds onto a private blockchain with major players like BlackRock and Fidelity.
- How Mirrored Tokenized MMFs Work – A step-by-step look at the “mirrored tokenization” model that blends blockchain efficiency with existing legal structures.
- Values of Tokenization – How institutions can achieve faster settlement, 24/7 collateral mobility, and smart-contract automation for complex financial tasks
- Traditional vs. Tokenized – Side-by-side comparison of today’s MMF processes and the upgraded blockchain-enabled model.
- The Bigger Picture – How this initiative lays the groundwork for a more efficient, programmable, and globally connected financial system.
Section 1. Goldman and BNY Mellon Tokenize MMF on Chain
On July 23, 2025, Goldman Sachs and BNY Mellon announced a partnership to tokenize money market fund shares. The project uses a private blockchain to create digital representations of these shares and includes participation from asset managers such as BlackRock and Fidelity, as shown in the diagram below.
This initiative will alter the infrastructure of the 7 trillion money market fund industry. The intended results are:
- Near-Instant Settlements: Transaction settlement times are reduced from multiple days to nearly instantaneous, which lowers administrative friction and costs.
- 24/7 Programmable Collateral: Money market funds are converted from static holdings into mobile, programmable collateral that is available 24/7 for managing liquidity and risk.
Section 2. What Tokenized Money Market Fund (TMMF) Is
An MMF is a mutual fund investing in short-term, high-quality debt (e.g., T-bills, repos). The aim is capital preservation and daily liquidity. Many government/retail MMFs target $1.00 NAV; some institutional prime funds float. Used by institutions (treasury cash management) and individuals (cash parking/emergencies).
Real-World Asset (RWA) Tokenization
Tokenization records an ownership interest/claim in an asset (real estate, art, private equity, bonds, etc.) as a blockchain token, enabling fractional ownership and programmable transfers. Depending on the structure, the legal register may remain off-chain.
Tokenized Money Market Funds (TMMFs)
A TMMF represents shares of a regulated MMF as blockchain tokens—a new representation, not a new asset class. Unlike a stablecoin (a currency-like token), a TMMF is a security representing an interest in the fund.
Key attributes:
Traditional foundation: Same underlying MMF and regulation.
Digital representation: Token mirrors fund shares 1:1 per issuer design.
Value & rights: Token inherits the fund’s Net Asset Value (NAV) policy (many target $1; some float) and investor rights in fund docs.
Movement & cash flows: On-chain transfers can finalize in seconds 24/7; subscriptions, redemptions, and payouts follow fund procedures and bank/stablecoin rails (KYC/whitelisting typically required).
Section 3. The Mirrored TMMF Model
Participants and Their Roles
The initiative is a partnership between Goldman Sachs and BNY Mellon, with participation from major asset managers. The collaboration is designed to connect the established infrastructure of traditional finance with new digital asset capabilities. Each participant has a distinct and essential role.
- TradFi Anchor – BNY Mellon
- As one of the world’s largest custodians, BNY Mellon’s primary role is to act as the fund administrator. It maintains the official, legally binding record of who owns the MMF shares. This primary ledger is kept off-chain in its traditional systems, ensuring the entire structure remains compliant with existing securities laws. BNY Mellon also provides the client-facing portal, LiquidityDirect, which allows institutions to buy and sell shares through a familiar interface.
- Goldman Sachs – Digital Operator
- Goldman Sachs provides and operates the core blockchain technology through its private, permissioned Digital Asset Platform (GS DAP®). A permissioned network means that only approved and vetted participants can join. This platform is the on-chain environment where digital tokens representing the MMF shares are created (“minted”), transferred between participants, and ultimately destroyed (“burned”) upon redemption.
- BlackRock, Fidelity, etc. – Asset Managers
- A group of major asset management firms, including BlackRock, Fidelity Investments, and Federated Hermes, participate by making their Money Market Funds available on the platform. They supply the underlying financial products that are tokenized, ensuring that clients have access to a diverse and substantial pool of assets from trusted providers.
The “Mirrored Tokenization” Model
Two records run in parallel. BNY Mellon keeps the official, legally binding shareholder record off-chain (“golden record”), while a 1:1 mirror token is issued on GS DAP, Goldman’s permissioned blockchain. The aim is to get blockchain speed/availability without changing the legal recordkeeping framework. It separates legal finality (off-chain) from on-chain utility, letting institutions use blockchain benefits while staying within known securities-law processes.
- Subscription. Client subscribes through BNY’s LiquidityDirect as usual (institutional, KYC/whitelist).
- Dual-Record Creation. BNY updates its official ledger and triggers minting of a corresponding mirror token on GS DAP (BNY acts as tokenization manager).
- Digital Twin. The token is not the legal share; it’s a digital mirror that lives inside GS DAP’s private, permissioned network and reflects the off-chain record. Whitelisted participants only.
- On-Chain Utility. The token can be transferred/pledged between approved participants on chain, supporting improved transferability and collateral use; cash movements still use banking rails.
- Redemption. Client submits a redemption in LiquidityDirect; the mirror token is burned, and BNY processes the official redemption and cash payout, keeping both ledgers in sync.
Section 4. Why Tokenization – Value Propositions
This initiative provides three main benefits for institutional clients. It makes MMFs better for use as collateral, moves the industry closer to real-time settlement, and automates complex financial tasks.
1. Making MMFs Better Collateral
The project enables on-chain pledging of MMF positions between approved parties without cash redemption, so collateral can move in seconds while the underlying shares keep accruing yield (cash legs still use banking rails).
- Traditional: To post MMFs as collateral, firms redeem shares to cash (T+0 if before cut-off; otherwise T+1) and then post the cash via banking rails.
- Tokenized: The MMF position is pledged by transferring/locking its mirror token between whitelisted wallets on a permissioned chain (GS DAP®), without redeeming to cash. On-chain confirmations typically occur in seconds and are available 24/7; any cash movements still follow fund procedures and banking cut-offs. The underlying MMF shares continue to accrue yield, with economic entitlement set by the collateral agreement (subject to counterparty acceptance and documented terms).
2. Moving Toward Real-Time Settlement
The project is a step toward real-time settlement (or near real-time) for on-chain movements.
- Traditional: In finance, there is often a delay between when a transaction is agreed upon and when it is finalized. This delay creates settlement (counterparty) risk, which is the risk that one party could default before the exchange is complete. Fixed operating hours for markets also create challenges for global institutions managing cash across different time zones.
- Tokenized: By using a blockchain, the platform enables atomic delivery-versus-payment (DvP) when both legs of a trade are on chain (e.g., tokenized cash and tokenized MMF positions). In the current mirrored MMF model, the token leg can be confirmed in seconds and operate 24/7, while the cash leg still follows fund procedures and banking cut-offs. This reduces settlement risk and supports a 24/7 operational model for token transfers; full end-to-end atomic settlement depends on the cash leg being on chain.
3. Automating Financial Tasks
The platform uses smart contracts to automate complex financial workflows. Smart contracts are agreements written as code that automatically execute when specific conditions are met.
- Traditional: Many financial processes, like managing collateral for derivatives, require constant monitoring and manual intervention. This is operationally intensive and can be prone to human error.
- Tokenized: Smart contracts can automate these tasks when supported by price/valuation oracles and pre-agreed collateral terms. For example, a contract can be programmed to lock or transfer a precise amount of tokenized MMF collateral to a counterparty when a threshold is breached (an automated margin call). Cash movements still follow banking rails and fund cut-offs. This can reduce manual oversight, lower operational risk, and increase accuracy, subject to governance, risk limits, and compliance approvals.
Section 5. Future of finance is Immense
This initiative is not merely about new technology; it’s about building a bridge to the future of finance. Goldman Sachs and BNY Mellon have demonstrated that the path forward is not one of disruptive upheaval, but of thoughtful evolution. By connecting the trusted world of traditional finance with the vast potential of digital assets, they have opened a gateway to a new era of capital efficiency and market innovation. The plumbing of the financial world is being rebuilt, and this project marks the moment the future began to flow through it.
Disclaimer: This analysis is based on publicly available information. The information provided is for educational and informational purposes only and should not be construed as financial, legal, or investment advice.
About Global Venturing Labs (GVL)
We warmly welcome you to join our collaborative tech-driven venturing ecosystem.
GVL is a tech-driven venturing platform that empowers innovators by harnessing next-generation technologies, with primary focus on RWA tokenization, to fund innovative ideas and drive wealth creation. GVL fosters an ecosystem where founders, investors, tech experts, and visionaries collaborate seamlessly, transforming concepts into reality in a new era of decentralized venture creation.
Mission and Pillars
- Co-Knowledge Base – Delivering actionable insights, tools, and real-world examples to guide innovators in building thriving ventures. We empower our partners to share their expertise, fostering collective growth and innovation.
- Co-Community Networks – Fostering a global network of visionaries-founders, tech experts, investors, and enthusiasts – to connect, collaborate, and drive innovation.
- Co-Venture Platform – A future decentralized, DAO-based platform empowering members to launch businesses and invest through community-driven funding. We aim to provide values beyond capital.
Join us for the next-gen collaborative venturing!
