BNY, Citadel Securities test tokenized U.S. Treasuries to speed up Wall Street financing
- BNY and Citadel Securities completed a transaction showing how tokenized U.S. Treasuries can move from settlement into financing.
- The effort targets a key bottleneck in financial markets: moving government bonds used as collateral for trading and borrowing.
- BNY plans to expand digital cash services and traditional settlement hours as it works toward around-the-clock markets.
BNY, the world’s largest custody bank, and trading giant Citadel Securities said Tuesday they had completed a transaction using tokenized U.S. Treasuries, showing how blockchain technology could help Wall Street move assets between trading and financing more quickly.
The transfer focused on collateral, a key part of financial markets. Banks and trading firms use U.S. government bonds to secure short-term loans and fund trading activity. Moving those bonds between accounts and settlement systems can take time, tying up assets that could otherwise be put to work.
The effort comes as Wall Street explores bringing traditional assets onto blockchains. Firms including BlackRock, Franklin Templeton and JPMorgan have embraced tokenized funds and securities, betting the technology can shorten settlement times, automate processes and make assets easier to move.
Putting tokenized Treasuries to work
The aim of the BNY-Citadel Securities transaction was to demonstrate how tokenized government bonds could move from settlement into financing, potentially allowing firms to reuse collateral sooner and free up cash for other trades.
“Efficient movement of high-quality collateral is fundamental to well-functioning markets,” said Dan Doherty, digital assets operations lead at Citadel Securities, in a statement. He added that reducing delays across the trade lifecycle could improve how institutional markets operate.