BNY launches blockchain-based digital transfer agency

BNY, the world’s largest custodian bank, is embracing blockchain technology as part of its core infrastructure. The bank has announced a digital transfer agency that will record transactions and ownership registrations on the blockchain from now on, while the traditional system continues to run in parallel.

More than $59 trillion in assets under custody

BNY currently oversees more than $59 trillion in assets under custody and administration, making it one of the largest financial institutions globally. The transfer agency division, now going digital, processes trades and maintains ownership records for roughly $8.6 trillion spread across 7.6 million accounts.

Major names such as Baillie Gifford, BlackRock and BNY’s own Dreyfus fund are lining up to be the first to use the new system, reports the Financial Times. The choice of this select group as pioneers is telling: these parties together manage a vast portion of the global fund market.

Wall Street accelerates towards the digital age

BNY’s move fits a broader trend in which traditional financial institutions on Wall Street are increasingly shifting towards digital and decentralised infrastructure. By placing ownership records on the blockchain, the administration becomes more transparent and potentially more efficient than the paper-based and legacy system that is still the standard today.

Notably, BNY is not opting for a complete replacement of the current system. Both systems will run side by side, making the transition smoother for existing clients and reducing the risk of disruptions. In doing so, the bank shows that it takes blockchain seriously without turning everything upside down overnight.