Wall Street's biggest custodian and Citadel Securities run a repo trade on tokenized Treasuries, and BNY says it wants settlement that never closes

Tokenized government bonds have taken a step from the demo stage into the plumbing of Wall Street. BNY and Citadel Securities announced on Tuesday that they completed a transaction using tokenized US Treasuries, CoinDesk reported, with BNY describing it as a tokenized Treasury triparty repo workflow. Triparty repo is the short-term financing in which a bank sits between borrower and lender and manages the collateral, and US Treasuries are the collateral most of Wall Street pledges for its short-term loans and trading.

Moving those bonds between accounts and settlement systems can take time, which leaves cash and collateral idle. The test showed the same tokenized Treasury being used first for settlement and then for financing, which the two firms said could let institutions reuse collateral faster and secure liquidity sooner. Citadel Securities' digital assets operations lead said the efficient movement of high-quality collateral is fundamental to well-functioning markets, and that cutting delays across the trade lifecycle could improve institutional markets, according to CoinDesk. The article did not name the blockchain used or disclose the size of the trade.

BNY framed the trade as part of a bigger plan. It said it will add more digital cash and tokenized deposit capabilities to support blockchain-based settlement and financing, and will extend the operating hours of its traditional settlement systems for Federal Reserve-eligible securities and US triparty transactions, aiming to cover European and Asian trading hours in 2027 as it works toward markets that never close.

The move puts the custodian alongside BlackRock, Franklin Templeton and JPMorgan, which have all adopted tokenized funds or securities on the bet that the technology shortens settlement, automates processes and makes assets easier to move. Also on Tuesday, The Block reported a first over-the-counter swap referencing a fully tokenized S&P index on the Canton Network, another sign that tokenization is reaching the parts of finance that traders, not retail investors, use.