BNY and Citadel Securities have completed a U.S. Treasury financing transaction using a tokenized security as collateral on a major triparty repo platform for the first time.
Summary
- BNY and Citadel Securities completed the first transaction involving tokenized assets on a major triparty repo platform.
- A 2-year US Treasury note was tokenized on BNY’s private ledger and settled within minutes before being used as collateral in an overnight repo.
- BNY provided cash against the tokenized Treasury, demonstrating how digital securities can move from trade settlement into institutional financing.
- BNY plans to introduce digital cash and tokenized deposit services while expanding Treasury settlement operations into European and Asian trading hours next year.
According to BNY’s announcement, the transaction involved a 2-year U.S. Treasury note purchased by Citadel Securities through the bank on Tradeweb, with a digital representation of the security settling within minutes on BNY’s private ledger.
Citadel Securities subsequently pledged the tokenized Treasury as collateral for an overnight repurchase agreement, with BNY providing cash against the security.
BNY described the transaction as the first use of tokenized assets on a major triparty repo platform, bringing digital securities into an established financing process used by institutional market participants.
The bank said the transaction covered several stages of the Treasury trade lifecycle, including execution, settlement and collateral financing, without requiring the security to move through the usual T+1 settlement cycle.
BNY completes tokenized Treasury settlement within minutes
The transaction began with Citadel Securities purchasing a 2-year Treasury note on Tradeweb, an electronic trading platform used by institutional investors.
Following execution, BNY recorded a tokenized representation of the purchased security on its private digital ledger. Settlement was completed within minutes, compared with the standard next-business-day settlement process for conventional Treasury transactions.
The security was subsequently used in an overnight triparty repo, a financing arrangement in which one institution obtains short-term cash by providing securities as collateral.
Under the arrangement, BNY served as the triparty infrastructure provider and supplied cash to Citadel Securities against the tokenized Treasury.
Triparty repo arrangements typically involve a third-party agent responsible for collateral management and settlement services between the cash borrower and lender.
BNY’s existing position as a Treasury settlement agent and collateral manager allowed the tokenized security to be used within its institutional financing infrastructure.
The bank did not disclose the transaction’s value, the financing rate or the amount of cash provided to Citadel Securities.
Carolyn Weinberg, BNY’s chief innovation and market transformation officer, said the transaction demonstrated how tokenized assets could be used across multiple institutional financial processes.
“By using a tokenized representation of a U.S. Treasury across both settlement and financing, we are enabling more connected, efficient and always-on financial system,” Weinberg said.
Dan Doherty, digital assets operations lead at Citadel Securities, pointed to the movement of collateral as an important part of the transaction.
“Efficient movement of high-quality collateral is fundamental to well-functioning markets,” Doherty said.
He said the collaboration showed how tokenized Treasuries could move from settlement into financing with fewer operational delays.
BNY builds on its existing digital asset infrastructure
The transaction follows several initiatives through which BNY has been incorporating blockchain technology into its institutional banking and asset servicing businesses.
In July, the bank introduced blockchain-based transfer agency services designed to maintain investment fund ownership records and investor transactions on a shared digital ledger.
As crypto.news reported at the time, the platform was initially intended to support tokenized funds from Baillie Gifford, BlackRock and BNY Dreyfus.
BNY’s transfer agency business managed approximately $8.6 trillion in assets across 7.6 million investor accounts, according to the July report.
The bank planned to operate its conventional transfer agency services alongside the blockchain platform, allowing institutional clients to use digital records while retaining existing fund administration arrangements.
In August, BNY partnered with Galaxy to bring institutional staking capabilities into its Digital Asset Custody platform.
Under the agreement, Galaxy would provide staking infrastructure for eligible institutional clients, subject to regulatory review.
The bank had previously conducted after-hours U.S. Treasury transactions with stablecoin issuers and was preparing tokenized Treasury infrastructure for institutional use before the end of 2026.
Its digital asset operations have expanded into regulated custody services in Europe, where its Belgian subsidiary received authorization under the Markets in Crypto-Assets framework.
BNY’s latest Treasury transaction concerns a separate part of its institutional business, where securities are used to obtain short-term funding through established repo arrangements.
Brian Ruane, BNY’s global head of clearance and collateral management, credit services and corporate trust, said financial infrastructure needed to keep pace with Treasury trading activity as market operations became more continuous.
He said tokenized collateral could reduce friction while retaining the market structures institutions already use.
Tokenized Treasuries enter institutional collateral markets
Financial institutions have been testing tokenized government securities in lending, settlement and repo transactions as they develop systems for moving collateral through digital ledgers.
In August, Virtu Financial, M1X Global and Tradeweb completed a sovereign bond repo on the Canton Network.
The transaction used USDM1, a sovereign digital bond backed by short-term U.S. Treasury securities, with the full repo and repurchase cycle settling in less than 10 minutes.
Unlike BNY’s transaction, which used its private ledger and established triparty infrastructure, the Virtu transaction processed the securities delivery, cash transfer and repurchase legs on the Canton Network.
Institutional interest in tokenized collateral has been growing beyond individual transactions.
A September report from Citi found that 77% of surveyed institutions were considering tokenized collateral, as financial firms examined ways to move assets outside conventional settlement hours.
The report identified real-time margining and Treasury transfers across time zones as potential applications.
Meanwhile, the Depository Trust & Clearing Corporation has been preparing its own tokenization infrastructure for U.S. securities markets.
DTCC’s production activity in July involved more than 30 financial and technology companies, including BlackRock, Goldman Sachs, JPMorgan and Citadel Securities.
Participating institutions completed transactions involving Treasury repo, collateral pledges, securities lending and settlement.
DTCC planned an October 2026 rollout for its tokenization service, following regulatory clearance from the U.S. Securities and Exchange Commission in December 2025.
BNY’s transaction represents a separate implementation through its own private ledger and triparty repo services.
BNY plans longer Treasury settlement hours and digital cash services
Following the transaction, BNY outlined plans to introduce additional digital cash and tokenized deposit capabilities for institutional clients.
The bank said the planned services would support settlement and financing transactions conducted through digital infrastructure.
BNY has already been developing tokenized deposits that represent customers’ existing claims on the bank, with the balances remaining recorded in its traditional banking systems.
The deposit tokenization service announced in January was designed to support institutional cash transfers using blockchain infrastructure.
Citadel Securities was among the institutions identified in connection with that program, alongside Intercontinental Exchange, DRW, Circle and other financial firms.
BNY expects to expand the operating hours of its conventional settlement platforms for Federal Reserve-eligible securities and U.S. triparty transactions.
Under its proposed timetable, the bank intends to make those services available during European and Asian trading hours next year.
Laide Majiyagbe, BNY’s global head of markets, said institutions needed access to securities and collateral at the time and location required for their transactions.
The bank expects its digital ledger capabilities and longer settlement hours to develop alongside each other as it prepares infrastructure for markets operating closer to 24 hours a day.
BNY has outlined its plans for Treasury market infrastructure, programmable settlement and collateral mobility in a separate BNY Institute paper examining the next stage of U.S. Treasury market development.