Key Takeaways:
- The tool automates the updating of fund valuations on a secure blockchain, cutting down on manual interventions and third-party reliance.
- BlackRock’s early use signals a growing trend among established asset managers to integrate digital solutions into traditional finance.
- This development could prompt the broader financial sector to modernize data systems and boost transparency in fund management.
The Bank of New York Mellon Corporation (BNY Mellon) unveiled a new blockchain-powered accounting tool on Thursday designed to improve fund transparency and efficiency.
According to Fortune Crypto, the tool, officially named Digital Asset Data Insights, allows the bank to publish a fund’s net asset value (NAV) directly onto a blockchain, eliminating reliance on third-party accounting services.
Asset management giant BlackRock became the first client to adopt the tool, integrating it into its on-chain money market fund, BUIDL.
This move comes amid a loosening regulatory grip that has seen increased acceptance of blockchain applications in finance.
Following initial regulatory roadblocks under the previous administration, the Securities and Exchange Commission (SEC) has recently softened its stance on digital assets, which has paved the way for greater blockchain adoption.
BlackRock and the Future of Tokenized Assets
As the world’s largest asset manager, BlackRock has has actively pursued financial technology advancements.
BlackRock’s USD Institutional Digital Liquidity Fund, BUIDL, launched in 2024, has been a pioneer in tokenized short-term U.S. Treasury funds.
With the integration of BNY Mellon’s Digital Asset Data Insights, BUIDL’s NAV data will be broadcast on-chain, ensuring real-time visibility for investors.
This development aligns with BlackRock CEO Larry Fink’s vision, which has repeatedly highlighted how tokenization could change financial markets.
Fink has suggested that tokenization can streamline operations, reduce costs, and enhance security across various asset classes.
Robert Mitchnick, BlackRock’s head of digital assets, hailed the partnership with BNY Mellon as a watershed moment for the industry.
“BNY’s enablement of off-chain data insights to public blockchains is an unprecedented event and a significant milestone for the industry. By enhancing data transparency and accessibility for our investors, BNY has set a new standard for digital asset innovation.”
BNY Mellon’s Expanding Blockchain Footprint
BNY Mellon’s foray into blockchain technology is not new. The bank has been steadily expanding its digital asset services over the years.
In 2022, BNY Mellon launched its Digital Asset Custody Platform, allowing institutional clients to store and transfer Bitcoin and Ethereum.
However, the launch encountered regulatory friction under the Biden administration, particularly regarding balance sheet requirements for institutions holding crypto assets on behalf of clients.
In response to regulatory challenges, BNY Mellon secured an exemption in 2024, permitting it to provide digital asset custody services for exchange-traded products (ETPs) without them being classified as balance-sheet liabilities.
The subsequent rescission of the SEC’s controversial SAB 121 rule under the Trump administration further removed barriers, allowing BNY Mellon to expand its blockchain initiatives without facing undue financial restrictions.
Vanessa A. Countryman, Secretary of the SEC, confirmed that SAB 122 has officially replaced SAB 121 in the regulatory framework.#SAB121 #CryptoAccounting #USSEChttps://t.co/feyCzuakYH
— Cryptonews.com (@cryptonews) January 24, 2025
Caroline Butler, BNY Mellon’s global head of digital assets, mentioned that the blockchain tool is part of a broader strategy to bridge the gap between traditional and digital finance.
“Accessing transparent data is critical to our clients’ success in today’s market. Our platform’s support of Digital Asset Data Insights underscores our commitment to servicing the end-to-end asset lifecycle via distributed ledger technology while maintaining data integrity from a trusted source.”
BNY is not the first to bring such a solution for crypto firms, but it was the first to put it on the blockchain.
A report from July last year shows that KPMG partnered with Cryptio to help U.S. crypto firms comply with Generally Accepted Accounting Principles (GAAP) by implementing stronger accounting controls.
The collaboration aims to assist companies in properly accounting for their crypto assets and ensure regulatory compliance.
With over $52 trillion in assets under custody, BNY Mellon’s continued push into blockchain signals growing interest in integrating this technology into mainstream fund operations.
Frequently Asked Questions FAQs
This integration blends legacy practices with digital recordkeeping. It reshapes operational frameworks, boosts data traceability, and clearly reduces external audit needs, suggesting a cautious shift in regulatory approaches.
Banks could rework legacy systems to fully interface with digital ledgers. The change demands updated IT frameworks, comprehensive staff retraining, and process refinement to align with advanced data management and audit protocols.
This shift may foster investor trust by offering real-time, immutable records that enhance market predictability. Enhanced clarity and data verification encourage smoother market operations, prompting a cautious yet steady investor response.
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