Author: Krisztian Sandor
Compiled by Deep潮 TechFlow
Shenchao Summary: The world’s largest custodian and top market maker have simultaneously completed both “settlement” and “financing” processes using tokenized U.S. Treasuries—not merely another pilot, but a pivotal moment where RWA begins to penetrate repurchase agreements, Wall Street’s most core funding channel. BNY also announced it will extend traditional settlement and tri-party repo hours to cover European and Asian trading times next year, signaling the emergence of a “24/7” collateral market.
On Tuesday, BNY, the world's largest custodian bank, and trading giant Citadel Securities announced they have completed a transaction using tokenized U.S. Treasury bonds, demonstrating how blockchain technology can help Wall Street move assets more quickly between trading and financing.
This transfer focuses on collateral—a critical component of financial markets. Banks and trading firms use U.S. government bonds as collateral for short-term loans and to finance trading activities. Transferring these bonds between accounts and settlement systems can take time, tying up assets that could otherwise be utilized.
This move comes as Wall Street explores moving traditional assets onto the blockchain. Companies such as BlackRock, Franklin Templeton, and JPMorgan have embraced tokenized funds and securities, betting that this technology can shorten settlement times, automate processes, and make assets more liquid.
Get tokenized U.S. Treasuries moving
The purpose of the transaction between BNY and Citadel Securities is to demonstrate how tokenized government bonds can move from settlement to financing, potentially enabling companies to reuse collateral earlier and free up cash for other transactions. "Efficient liquidity of high-quality collateral is fundamental to the proper functioning of markets," said Dan Doherty, Head of Digital Assets Operations at Citadel Securities, in a statement. He added that reducing latency throughout the trade lifecycle can improve the way institutional markets operate.
BNY plans to introduce additional digital cash and tokenized deposit features to support blockchain-based settlement and financing.
Meanwhile, the bank stated that it expects to extend the operating hours of its traditional settlement system for Federal Reserve-eligible securities and U.S. tri-party transactions, aiming to cover European and Asian trading sessions next year. Tri-party transactions are a form of short-term financing in which a bank manages collateral between borrower and lender.
"By using tokenized U.S. Treasuries in both settlement and financing, we are building a more interconnected, efficient, and always-on financial system," said Carolyn Weinberg, Chief Innovation and Market Transformation Officer at BNY, in a statement.