CoinDesk
BNY and Citadel Securities completed a transaction using tokenized U.S. Treasuries to move government bonds from settlement into financing. The test targets collateral, which banks and trading firms use to secure short-term loans and fund trading activity. Faster transfers could reduce the time assets remain tied up between systems.
Why it matters
Collateral movement is a core constraint in institutional markets. Delays between settlement and financing can prevent firms from reusing high-quality government bonds or putting cash to work in other trades. Tokenized Treasuries offer a blockchain-based representation that can connect those steps more directly.
The transaction adds institutional weight to a broader push to bring traditional assets onto blockchains. BlackRock, Franklin Templeton and JPMorgan have also advanced tokenized funds or securities, with the sector focused on shorter settlement times, automated processes and more flexible asset movement.
Market impact
BNY plans to expand digital cash and tokenized deposit capabilities for blockchain-based settlement and financing. The bank also expects to extend operating hours for traditional settlement systems covering Federal Reserve-eligible securities and U.S. triparty transactions, targeting European and Asian trading hours next year.
That combination points to a gradual shift toward markets that operate for longer periods and reuse collateral more efficiently. Citadel Securities digital assets operations lead Dan Doherty said efficient movement of high-quality collateral is fundamental to functioning markets. BNY's Carolyn Weinberg said tokenized Treasuries can support a more connected and always-on financial system.
Frequently asked questions
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What did BNY and Citadel Securities test?
They completed a transaction using tokenized U.S. Treasuries to move government bonds from settlement into financing.
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Why is collateral movement important for Wall Street?
Banks and trading firms use government bonds as collateral for short-term loans and trading activity. Delays can leave those assets tied up and limit their reuse.
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How could tokenized Treasuries improve financing?
A tokenized representation can connect settlement and financing more directly, potentially allowing firms to reuse collateral sooner and free up cash for other trades.
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What digital services does BNY plan to expand?
BNY plans to expand digital cash and tokenized deposit capabilities to support blockchain-based settlement and financing.
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When will BNY extend traditional settlement hours?
BNY expects to extend operating hours for Federal Reserve-eligible securities and U.S. triparty transactions into European and Asian trading hours next year.
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