BNY Mellon pilot aims faster settlement

Tokenized deposits are being piloted by BNY Mellon in 2025 as the custodian tests blockchain rails to speed settlement and cut costs for large-scale payments (BNY Mellon official site).

bny mellon tokenized deposits: what is the bank testing?

BNY Mellon, the world’s largest custodian, is running an exploratory pilot to move client deposits as digital tokens over a blockchain.

The work is limited and experimental. The aim is to modernize a payments stack that still relies on legacy systems and to let clients move money within bank networks more quickly and with fewer steps. It should be noted that the programme is framed as a resilience and operational-efficiency exercise.

In this context, the pilot focuses on internal flows and tightly controlled client interactions. The bank emphasises careful validation over haste. For background, see our coverage: BNY Mellon tokenized deposits.

Can blockchain payments instant settlement be achieved?

BNY Mellon says tokenizing deposits could enable near-instant settlement and reduce reconciliation layers.

The bank processes substantial payments and reportedly held over $41 trillion in assets under custody as of Q3 2022, according to reporting from Bloomberg. Yet the effort remains early and timelines are not fixed.

• Scope: pilot phase with internal and controlled client tests.
• Potential benefits: faster finality and lower operational friction.
• Caveat: full production deployments will require extensive validation and regulatory clarity.

Technically, tokenized rails aim to collapse settlement steps and remove duplicate ledgers. That said, consensus, permissioning and reconciliation models must be designed to meet bank-grade controls.

Further technical context is explained in our analysis: blockchain payments instant settlement.

How does this link to jpmorgan jpm token experiments and tokenized funds banking adoption?

BNY Mellon joins other big banks piloting tokenized money. For example, JPMorgan experimented with on-chain tokens in 2025, a move reported widely by the press.

Likewise, several institutions have launched tokenized money market funds, showing momentum toward tokenized funds banking adoption. Consequently, banks are exploring multiple designs simultaneously.

Market participants are therefore shifting from proofs-of-concept to controlled client trials. However, interoperability and legal treatment of tokens remain open questions. In practice, that means different architectures will be tested and compared before standards emerge.

What are the regulatory and market risks?

Regulators focus on custody, settlement finality and consumer protections. Tokenized deposits can blur the line between a bank liability and a digital representation of cash.

Thus, oversight frameworks will strongly influence adoption speed. In practice, banks must document controls for token custody, access management and operational resilience before wider rollouts.

It should be noted that legal clarity is as important as technical readiness. Without clear rules on enforceability and insolvency treatment, institutions will limit exposure and scale slowly. That conservative posture is visible across pilot programmes.

Why should traders and institutional investors care?

Faster settlement cuts counterparty and intraday liquidity risks. Moreover, it can lower processing costs and shorten funding cycles.

For treasury teams, tokenized rails could enable quicker collateral moves and tighter treasury operations. Yet benefits depend on network reach and standardized settlement rules.

From a trading perspective, improved finality reduces settlement fail rates and the need for precautionary liquidity buffers. For custodians, stronger reconciliation tooling and clear rollback procedures will be prerequisites for client adoption.

What else is happening at BNY and in the market?

Recently, BNY Mellon and Goldman Sachs launched tokenized money market funds for clients, marking a practical step toward on-chain cash instruments.

BNY Mellon described the work as an “exploratory pilot” intended to enhance settlement speed and operational resiliency, while Bloomberg covered the broader wave of custodial bank blockchain payments experiments. Related reading: Tokenized money market funds.

From an editorial perspective, firms must prioritise operational controls when moving deposits on-chain.
In practice, this means layered testing, clear rollback plans and stronger reconciliation tooling. Importantly, the pace of adoption will hinge on both technical integration and regulatory signals.

As Bloomberg noted, these pilots show banks balancing innovation with caution. Overall, tokenization may reshape settlement practices, but the transformation will likely be gradual and measured.