On October 13, BNY reported that they and Citadel Securities had completed a transaction where a tokenized U.S. Treasury was both settled and used as collateral in a triparty repo. According to the bank, this marks the first time that tokenized assets have been used in a major triparty repo system.
What happened
Citadel Securities purchased a two-year U.S. Treasury note using BNY on Tradeweb. A tokenized version of the note was entered into BNY’s private digital ledger and, according to BNY, settled in minutes compared to the typical T+1 settlement process. Following settlement, Citadel pledged the tokenized Treasury note as collateral in an overnight tri-party repo transaction where BNY provided the cash.
| Disclosed by BNY | Not disclosed |
|---|---|
| Asset: a two-year US Treasury note | Size or value of the trade |
| Execution venue: Tradeweb | The ledger technology behind BNY’s private ledger |
| Record: BNY’s private digital ledger | Whether the token is the security itself or a record of it |
| Settlement: within minutes, versus T+1 | Whether this was a one-off or the start of a live service |
| Financing: overnight triparty repo, cash from BNY | How the cash leg was settled |
Why repo is the test that matters
The financial system funds itself through repo overnight. A company will sell its securities (most often U.S. Treasuries) and then agree to buy those same securities back the following day. This effectively allows the company to borrow money by using its securities as collateral. In a triparty repo agreement, there is a third party (in this case, BNY Mellon) that will hold the collateral; determine its value; and allocate the money/collateral among the two parties. Since Treasuries that are currently settling cannot be used as collateral, a Treasury security purchased on a T+1 settlement schedule would likely not provide immediate access to cash through a repo agreement.
This gap is what the trade was designed to fill. According to Citadel’s Digital Assets Operations Lead, Dan Doherty, this illustrated “how tokenized U.S. Treasury bonds may be moved from the settlement process into financing at an accelerated rate.” BNY’s Global Head of Clearance and Collateral Management, Brian Ruane, stated that “with increased frequency of Treasury Market Activity, we need to continue to develop our infrastructure to support Liquidity, Funding, and Collateral Management.”
Did it need a blockchain?
Ledger Insights noted that BNY is currently the sole remaining Tri-Party Agent in the United States after JPMorgan exited the space in 2019. Therefore, if two of BNY’s clients wanted to trade securities with each other, they could do so via internal ledger entries, possibly in real-time, without utilizing any tokens. Furthermore, BNY has conducted intra-day repo transactions (e.g., UBS borrowing from Swiss Re) and has completed after-hours Treasury settlements utilizing traditional processes. Additionally, in the case of the above-mentioned transaction, BNY acted as both the Tri-Party Agent and the Cash Lender. This is an uncommon occurrence which allowed all aspects of the transaction to remain within a single organization.
This is a fair reading of the results. The results demonstrate the workflow being conducted on a private ledger in BNY’s existing market structure; this is what Ruane referred to as a “trusted market structure.” However, at this point, it is unclear what benefits are provided by a token when collateral must be moved between banks, custodians or platforms that use different books.
What BNY plans next
The Block reported that BNY Mellon will be providing on-chain settlement and financing options with the addition of digital cash and tokenized deposit services. In January, BNY launched a tokenized deposit option for institutions, including Citadel Securities. To make a repo completely on-chain, you would need to have both the cash leg and the collateral leg of the transaction on-chain. This particular trade was only one leg of the on-chain repo.
The bank is also on a traditional track. They plan to expand the hours they operate their conventional settlement platform for Fed-eligible securities and US tri-party deals, so that they can “be able to provide services during European and Asian trading hours next year.” BNY sees these two tracks as alternative methods to achieve a 24/7 market. This provides an excellent example that expanding operational hours on existing rails addresses some of the same issues.
Why it matters
The majority of focus on tokenised treasuries is directed towards funding products available to investors, like the money market funds offered by blackrock and jpmorgan on public blockchains. However, this trade indicates another function; tokenised government debt acting as a form of collateral plumbing within the funding market. If this can operate at scale, it will lead to benefits for companies involved in managing liquidity and margins via reduced collateral usage time and less time spent holding cash. At present neither company has quantified these benefits and one transaction does not indicate adoption.
The open questions, about who records the asset, how the token’s legal status is established and whether it can move beyond one institution’s ledger, are the ones shared infrastructure has to answer. Blockmaze, which was not involved in this transaction, answers these questions with an on-chain issuer registry, verified issuer admission, and different token standards for bearer-redeemable assets versus assets with externally registered legal ownership.
What to watch
What happens next depends on whether BNY performs the same process with additional customers; provides volume data; identifies the ledger being used; and uses tokenized deposits to settle the cash portion of transactions. If any of these things occur, it will indicate if this is just a single instance of a service, or an example that has been carefully selected.
Sources
BNY press release, 13 October 2026; The Block, 14 October 2026; Ledger Insights, October 2026; Blockhead, 14 October 2026; blockmaze.org.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Readers should conduct their own research and consult with qualified professionals before making any investment or business decisions.