BNY and Citadel Securities complete a trade using tokenized U.S. Treasuries

BNY, the world's largest custody bank, and trading firm Citadel Securities said on Tuesday they had completed a transaction using tokenized U.S. Treasuries — a test of whether blockchain-based assets can make Wall Street's plumbing faster.

What they tested

The deal focused on collateral. Banks and trading firms pledge government bonds to secure short-term loans and fund trading. Moving those bonds between accounts and settlement systems takes time, and assets tied up in transit cannot be put to work.

The aim was to show a tokenized Treasury moving from settlement straight into financing, so firms could 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.

BNY's next steps

• More digital cash and tokenized deposit capabilities to support blockchain-based settlement and financing.
• Longer operating hours for its traditional settlement systems for Fed-eligible securities and U.S. triparty repo, aiming to cover European and Asian trading hours next year.

The bigger picture

The test adds to a steady stream of tokenization work by large financial institutions — BlackRock, Franklin Templeton and JPMorgan have all launched tokenized funds or securities — on the bet that on-chain assets can settle faster and move around the clock.