Bank of New York Mellon, the world's largest custodian bank with $62.6 trillion in assets under custody and administration, disclosed plans on July 22 to build round-the-clock settlement infrastructure for U.S. Treasuries — both conventional and tokenized — on a private blockchain. The bank aims ...
"Payments, liquidity, collateral, digital assets, and securities markets are becoming more interconnected, creating demand for infrastructure that operates with greater speed, certainty, and resilience." — Robin Vince, CEO, BNY Mellon
Bank of New York Mellon, the world's largest custodian bank with $62.6 trillion in assets under custody and administration, disclosed plans on July 22 to build round-the-clock settlement infrastructure for U.S. Treasuries — both conventional and tokenized — on a private blockchain. The bank aims to begin pilot trades by year-end 2026 and reach full 24/7 capability in 2027.
The initiative targets a structural mismatch: stablecoins backed by $319.9 billion in aggregate supply trade continuously, but the short-dated Treasuries and money-market instruments underlying their reserves settle only during Fedwire's weekday operating hours. That gap delays reserve adjustments following large creations, redemptions, or collateral calls. BNY's move would extend settlement windows across Asian, European, and U.S. trading hours, effectively eliminating the weekend lag for the largest asset class in global finance — a market exceeding $30 trillion in outstanding debt with average daily trading volume of $267.7 billion as of January 2026.
The announcement arrives as tokenized Treasury funds have crossed $15.86 billion in on-chain assets under management, up from roughly $850 million two years prior. BNY is not entering this market as a peripheral player. It already serves as primary custodian for Ripple's RLUSD stablecoin reserves and for Circle's USDC reserves, and provides custody and investment management for OpenEden's tokenized Treasury fund.
The U.S. Treasury market moved to T+1 settlement in May 2024, reducing overnight counterparty risk. But T+1 still counts in business days. A Friday trade settles Monday. A trade placed before a holiday stretches an additional calendar day. Fedwire Securities, the Federal Reserve's settlement system for government securities, operates approximately 21.5 hours on weekdays and shuts down entirely on weekends and federal holidays.
This creates a specific problem for the $319.9 billion stablecoin market. As of mid-2026, Tether holds approximately $184.7 billion in reserves and Circle holds roughly $73.6 billion — the vast majority of which is parked in short-dated U.S. Treasuries, Treasury-backed money market funds, and cash equivalents. These assets trade and settle on weekday rails. The stablecoins they back trade 24/7/365.
When a large redemption hits a stablecoin issuer on a Saturday, the underlying Treasury cannot be liquidated until Monday's Fedwire window opens. This forces issuers to maintain larger cash buffers than would otherwise be necessary — capital that sits idle rather than earning yield. According to SIFMA data, U.S. government bond ADV reached $267.7 billion in January 2026, a 15.3% year-over-year increase. The gap between when digital assets trade and when their underlying collateral settles is widening as volumes grow on both sides.
The same problem applies to tokenized Treasury funds. BlackRock's BUIDL fund holds $2.52 billion, Franklin Templeton's BENJI products hold a combined $2.5 billion, and Ondo's USDY holds $2.14 billion. These funds issue tokens that trade on-chain around the clock, but their NAV calculations, creations, and redemptions remain tethered to traditional market hours.
Earlier in 2026, BNY completed an after-hours U.S. Treasury transaction involving two stablecoin issuers. The test paired Ripple, issuer of RLUSD, with BNY's Dreyfus unit acting on behalf of OpenEden, which issues the USDO stablecoin.
Key details of the test:
The test demonstrated that Treasury trading activity can continue beyond standard U.S. market hours using existing infrastructure, provided both counterparties share the same custodian. This is a narrow but significant proof of concept: it does not require Fedwire to extend its hours or the Federal Reserve to change its operating schedule. It requires an intermediary large enough to internalize settlement — precisely BNY's position.
BNY's next step involves moving from after-hours bilateral trades to tokenized Treasury instruments on a private blockchain. The bank plans to introduce tokenized Treasuries and conduct pilot trades on this permissioned network by the end of 2026.
The choice of a private blockchain is notable. Unlike DTCC's Digital Launchpad, which completed its first production trades of tokenized Russell 1000 equities in July 2026, or Franklin Templeton's BENJI fund, which operates on public chains including Ethereum, Stellar, and Avalanche, BNY is building on controlled infrastructure. This reflects several constraints:
The bank has not disclosed which blockchain technology underpins the platform. In January 2026, BNY launched tokenized deposit balances for institutional clients, suggesting it already operates internal distributed ledger infrastructure.
The market for tokenized U.S. government debt has grown rapidly. As of late July 2026, U.S. Treasury products represented the largest category in the broader real-world asset tokenization market at $15.86 billion in distributed value, up 2.23% over the prior 30 days. The total RWA tokenization market reached $34.67 billion on July 22, 2026, down slightly from a $35.2 billion peak recorded on July 10.
The top five tokenized Treasury issuers by AUM as of mid-2026:
| Issuer | Product | AUM | |--------|---------|-----| | Circle/Hashnote | USYC | $2.91B | | BlackRock/Securitize | BUIDL | $2.58B | | Ondo Finance | USDY | $2.14B | | Franklin Templeton | BENJI | $2.05B | | Centrifuge | JTRSY | $1.24B |
Year-over-year AUM growth across the category runs approximately 75%, with some individual products exceeding 100%. Franklin Templeton's BENJI fund reported over 100% YTD growth in 2026. In February 2026, BlackRock integrated BUIDL with the Uniswap decentralized exchange through a request-for-quote structure managed by Securitize, enabling compliant secondary market trading.
The question is no longer whether tokenized Treasuries will attract assets. The question is which settlement infrastructure will clear and settle those assets.
BNY occupies a unique position in the emerging tokenized Treasury stack. The bank reported Q2 2026 revenue of $5.7 billion, up 13% year-over-year, and its share price hit an all-time high of $157.66 following the earnings release.
Its digital asset custody relationships span the three largest categories of blockchain-native demand for Treasuries:
Stablecoin reserves: BNY is the primary custodian for both Ripple's RLUSD reserves and Circle's USDC reserves. USDC became the first stablecoin supported on BNY's Digital Asset Custody platform, with services including reserve custody, token custody, cash management, and fiat-to-blockchain conversion.
Tokenized Treasury funds: BNY provides custody and investment management for OpenEden's tokenized Treasury fund (USDO).
Institutional digital assets: In May 2026, BNY announced a strategic collaboration to offer regulated digital asset custody in Abu Dhabi Global Market, initially supporting Bitcoin and Ethereum custody.
This positions BNY as what CEO Robin Vince described as a bridge operator: the bank profits from expanding complexity in global markets by operating connectivity between conventional money, tokenized assets, and blockchain networks. Revenue accrues whenever assets cross between systems.
BNY's strategy differs from the approach taken by most tokenization platforms. Securitize, Ondo, and Franklin Templeton earn fees as asset issuers — management fees on AUM, typically ranging from 15 to 50 basis points. BNY's revenue model sits one layer below: custody fees, settlement fees, and transaction banking services on the assets those issuers create.
This is the custodian's classic arbitrage applied to a new asset class. As tokenized Treasury AUM grows from $15.86 billion toward projected levels, BNY collects fees on both sides — custody of the underlying Treasuries and custody of the tokenized representations.
The competitive landscape includes:
BNY's advantage is scale. At $62.6 trillion in AUC/A, it already touches more assets than any other financial institution. If tokenized Treasuries settle through BNY's infrastructure, the bank extends its existing role rather than building a new one.
On July 22, 2026 — the same day Bloomberg reported BNY's settlement plans — SEC Commissioner Hester Peirce published a statement titled "Headstands and Summervaults" addressing crypto vaults and on-chain lending. Peirce warned that moving activities onto blockchain does not eliminate regulatory obligations. Operators managing yield strategies or reallocating assets could face compliance requirements, and certain structures may be classified as investment companies.
The timing is coincidental but the regulatory context is relevant. BNY's private blockchain approach likely reflects an intent to keep tokenized Treasury settlement within the existing regulatory perimeter rather than testing its boundaries. The bank's G-SIB status subjects it to enhanced prudential standards from the Federal Reserve, OCC, and FDIC, making public-chain experimentation a higher-risk proposition.
Additional risk factors include:
BNY Mellon's 24/7 Treasury settlement initiative is not a tokenization experiment. It is a custody infrastructure upgrade by the institution that already custodies the reserves for several major stablecoins and tokenized Treasury funds. The bank is not disrupting the Treasury market; it is extending its existing role into time zones and asset formats that current infrastructure does not serve.
The $30-trillion U.S. Treasury market operates on infrastructure designed for business-day settlement. The $320 billion stablecoin market and $16 billion tokenized Treasury market operate on infrastructure designed for continuous settlement. These two systems are growing more interdependent as stablecoin issuers invest reserves in Treasuries and tokenized fund issuers seek broader distribution.
BNY's bet is that the bridge between these two systems will be operated by the same institutions that already settle the underlying assets. Whether that bridge runs on a private blockchain or a public one is a technical detail. The economic value accrues to the entity that controls settlement finality — and BNY is positioning to be that entity.