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BNY and Citadel Securities test tokenized Treasuries for faster Wall Street settlement

Bank plans to extend trading hours and introduce digital cash capabilities for blockchain-based financing

By LineZotpaper
Published
Read Time2 min
BNY and Citadel Securities are testing the use of tokenized U.S. Treasuries to accelerate Wall Street settlement and financing, the bank announced. BNY said it will introduce digital cash and tokenized deposit capabilities to support blockchain-based transactions, while also extending the operating hours of its traditional settlement systems to cover European and Asian trading hours next year.

BNY and Citadel Securities are testing a system that uses tokenized U.S. Treasuries for settlement and financing, aiming to make Wall Street transactions faster and more efficient. The bank said it plans to introduce additional digital cash and tokenized deposit capabilities to support blockchain-based settlement.

In a related move, BNY expects to extend the operating hours of its traditional settlement systems for Federal Reserve-eligible securities and U.S. triparty transactions, targeting European and Asian trading hours in 2027. Triparty transactions are a form of short-term financing where a bank manages collateral between borrowers and lenders.

“By using a tokenized representation of a U.S. Treasury across both settlement and financing, we are enabling a more connected, efficient and always-on financial system,” said Carolyn Weinberg, chief innovation and market transformation officer at BNY, in a statement.

The initiative represents one of the most significant steps by a major custodian bank to bring blockchain technology into mainstream capital markets infrastructure.

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Analysis

Why This Matters

  • Tokenizing U.S. Treasuries could dramatically reduce settlement times and operational costs for Wall Street firms.
  • Extending trading hours to cover European and Asian time zones would enable near-24/7 financing markets.
  • The move signals growing institutional adoption of blockchain for real-world assets, not just cryptocurrencies.

Background

Tokenization of real-world assets — converting traditional financial instruments into digital tokens on a blockchain — has gained traction among large banks seeking efficiency gains. BNY, as a major custodian, is positioned to integrate blockchain settlement with its existing triparty financing services. Citadel Securities, a leading market maker, provides the liquidity infrastructure to test these new instruments in live trading conditions.

Key Perspectives

BNY: Sees tokenized Treasuries as a way to create an always-on, connected financial system that reduces friction between settlement and financing. Citadel Securities: Likely benefits from faster, more capital-efficient settlement cycles that reduce counterparty risk. Critics/Skeptics: Regulatory uncertainty around blockchain-based securities settlement and the systemic risks of always-on markets remain concerns. Some question whether traditional financial infrastructure can safely integrate with distributed ledgers.

What to Watch

  • Whether other major banks and custodians launch similar tokenization pilots.
  • Regulatory guidance from the SEC and Federal Reserve on blockchain-based securities settlement.
  • BNY's rollout of extended trading hours in 2027 and any operational issues that arise.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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