Core Insights - BNY has launched a tokenized deposit service that enables clients to transfer funds using blockchain technology, marking a significant move by a major global bank into the digital asset space [1][3]. Group 1: Tokenized Deposits Overview - The new service allows for an on-chain mirrored representation of client deposit balances on BNY's Digital Assets platform, initiating the bank's strategy to tokenize deposits, starting with collateral and margin workflows [3][4]. - Tokenized deposits function as digital book entries that reflect clients' existing demand deposit claims against the bank, while still being recorded on BNY's traditional systems to maintain regulatory and accounting consistency [4]. Group 2: Operational Benefits - The launch aims to facilitate programmable, near-real-time cash movement, aligning with the financial markets' shift towards always-on operating models [5]. - Tokenized deposits are expected to reduce settlement friction, enhance liquidity efficiency, and enable rules-based payments across institutional workflows [5]. Group 3: Industry Participation and Developments - Early participants in the tokenized deposit initiative include notable firms such as Intercontinental Exchange, Citadel Securities, and Ripple Prime, among others [5]. - ICE plans to support tokenized deposits across its clearinghouses in preparation for 24/7 trading and settlement [6]. Group 4: Regulatory Context - BNY's approach to crypto custody has been reviewed by the SEC, which did not object to the bank's decision to exclude these crypto assets as liabilities on its balance sheet, a significant aspect given the SEC's SAB 121 rule [7].