BNY's Strategy for 24/7 U.S. Treasury Settlements

BNY Mellon is planning to enable continuous settlement for U.S. Treasuries, both traditional and tokenized, by 2027, following a successful after-hours trading trial.

BNY Mellon, the largest custody bank in the world, is set to revolutionize the settlement process for U.S. Treasuries by implementing 24/7 trading capabilities by 2027. This move comes after the bank successfully executed an after-hours transaction using stablecoin reserves from Ripple and OpenEden.

By the end of this year, BNY Mellon plans to pilot tokenized Treasuries on a private blockchain and expand its settlement network to accommodate longer trading hours across global markets, as detailed in a client letter reported by Bloomberg.

The previous test involved a transaction facilitated by Tradeweb, which occurred after the Fedwire Securities system had closed for secondary-market Treasury transfers. The transaction was settled shortly after using existing cash rails, demonstrating that Treasury operations can continue beyond the U.S. market's regular hours.

Although the securities in the test were not tokenized, the successful use of stablecoin reserves indicates that transactions can remain active even when the main U.S. settlement window is closed. The stablecoins used, RLUSD and USDO, are backed by short-dated government debt, allowing for continuous trading while the underlying Treasuries adhere to weekday settlement schedules.

BNY Mellon, which already acts as the primary custodian for RLUSD's reserves, also provides custody and investment management for OpenEden's tokenized Treasury fund. Earlier this year, BNY launched tokenized deposit balances, giving institutional clients on-chain access to commercial bank funds.