The Bank of New York Mellon has taken a major step into blockchain-based finance by launching a new tokenized deposit service. The move allows clients to transfer bank deposits using blockchain networks, showing that traditional banks are becoming more serious about digital assets.

According to Bloomberg, the service is designed to make payments faster, support round-the-clock operations, and modernize how large financial institutions move money across borders.

What Are Tokenized Deposits?

Tokenized deposits are digital versions of regular bank deposits. In BNY Mellon’s case, these tokens represent money that clients already hold in their accounts at the bank. The actual funds stay with BNY Mellon, while a digital version of the deposit moves on a blockchain system.

Because each token is fully backed by money held at the bank, it works much like normal cash. The difference is speed and flexibility. These on-chain deposits can be used for payments, as well as for collateral and margin needs in trading and clearing activities.

Why BNY Mellon Is Making This Move

BNY Mellon processes around $2.5 trillion in payments every day and safeguards nearly $55.8 trillion in assets for clients worldwide. Many of these payments still rely on older systems that operate only during business hours and can take time to settle.

Carl Slabicki, executive platform owner for Treasury Services at BNY Mellon, said the bank is using tokenized deposits to address these limits. Blockchain networks allow transactions to settle almost instantly and run 24/7, which is especially useful for cross-border payments that often face delays and extra costs.

In October 2025, BNY Mellon was already exploring this idea as part of a broader effort to modernize its payment systems. Slabicki said the goal was “to move deposits and payments faster and more efficiently, while keeping them within the bank,” adding that tokenized deposits could help banks overcome older technology constraints.

How Clients Can Use On-Chain Deposits

The bank highlighted several practical uses for institutional clients:

• Faster payments: Funds can move quickly, even outside normal banking hours.
• Collateral and margin: Tokenized deposits can be used in trading and clearing, reducing delays during busy market periods.
• Always-on operations: Payments can continue on weekends and holidays, unlike traditional banking systems.

BNY Mellon stressed that this is not a new cryptocurrency, but a technical upgrade to how existing deposits move between parties.

A Bigger Banking Trend

BNY Mellon is not alone. JPMorgan and HSBC have also tested tokenized deposit systems. Meanwhile, SWIFT is working on blockchain-based tools for real-time international payments, with BNY Mellon among the participants.

The bank has also partnered with Goldman Sachs, alongside firms like BlackRock and Fidelity, to track money market fund ownership on blockchain systems.

Final Thoughts

While BNY Mellon has not shared a timeline for a wider rollout, the launch signals strong interest in blockchain-based payments. Given the bank’s scale, its move could push more institutions to follow, quietly reshaping how money moves around the world.

This change means crypto companies operating in or targeting the UK will need fresh approval to continue doing business. Existing registrations will not automatically carry over, and firms that miss key deadlines could face strict limits on what they are allowed to offer.

The United Kingdom is moving closer to a fully regulated crypto market. The country’s financial watchdog, the Financial Conduct Authority (FCA), has confirmed that it will open a new crypto licensing gateway in September 2026, ahead of a broader regulatory framework that will take effect in October 2027.

What Is FCA Crypto Licensing?

Under the upcoming rules, firms that want to carry out new regulated crypto activities must be authorised under the Financial Services and Markets Act 2000 (FSMA). This authorisation must be in place when the new regime officially begins.

The requirement applies to a wide range of companies, including those currently registered under anti-money laundering rules, as well as firms authorised under payment services or electronic money regulations. Even businesses that are already operating legally today will need to apply again under the new framework.

When Does the Application Window Open?

The FCA’s crypto licensing gateway is expected to open in September 2026. This will be a limited application period, giving firms a defined window to submit their paperwork before the new rules go live in October 2027.

The application window must be at least 28 days long and must close at least 28 days before the new regime starts. Firms are strongly encouraged to apply during this period to avoid disruption to their business.

Existing Registrations Will Not Carry Over

One of the biggest changes is that current approvals will not automatically convert into the new system. This includes firms registered under:

• Anti-money laundering rules
• Payment services rules
• Electronic money rules

The FCA has clearly warned that companies should not assume their current status will protect them once the new regime begins. Firms that already hold FCA approval for non-crypto activities are also not exempt. They will need to update their existing permissions to include crypto services or risk losing the ability to operate in the UK.

Tougher Rules for Crypto Marketing

Crypto firms that currently rely on another FCA-approved company to approve their promotions will face new restrictions. Once the new regime starts, firms that want to market crypto products directly to UK customers will need their own FCA authorisation. Third-party approval arrangements will no longer be allowed.

What Happens If a Firm Misses the Deadline?

Firms that fail to apply during the application window will not be shut down immediately. Instead, they will enter a transitional phase. During this time, they can continue serving existing customers but cannot launch new products or services until they receive full approval. The FCA has also said late applications will not be fast-tracked.

Final Thoughts

The full crypto regulatory regime is expected to start on 25 October 2027. From that point on, only authorised firms will be allowed to offer regulated crypto services in the UK. The FCA says these steps are designed to create a safer and more transparent crypto market, while still giving firms enough time to prepare.

Also Read: Polygon Unveils Open Money Stack to Move All Money Onchain

Banking associations—including the American Bankers Association, the Bank Policy Institute, and more than 50 state-level organizations—are pressing the U.S. Senate to strengthen the newly passed GENIUS Act by closing key legal loopholes.

According to a Decrypt report, the GENIUS Act prohibits stablecoin issuers from paying interest directly to holders. However, it does not explicitly prevent crypto exchanges or affiliated platforms from offering rewards on stablecoin deposits. Banking groups argue this oversight effectively lets companies bypass the spirit of the law by shifting yield through partners.

That could incentivize consumers to shift from traditional bank deposits into yield-bearing stablecoins. A U.S. Treasury Department projection estimates losses of up to $6.6 trillion in bank deposits, which could disrupt traditional lending and increase borrowing costs for everyday Americans.

Why It Matters

These stablecoin-linked incentives have the potential to hollow out the existing banking system. Banks rely on customer deposits to support lending—businesses and households depend on that credit. If deposits shift on a large scale into stablecoin products, it could reduce available credit, driving up interest rates and making loans harder to access.

Additionally, most yield-generating stablecoin offerings are currently tied to leading platforms like USDC, with users earning returns via exchanges like Coinbase and Kraken—not from the issuers themselves. Banking groups argue this is a dangerous workaround.

What the Banks Are Asking

◆ Extend the Interest Ban
They request that the GENIUS Act’s prohibition of $ interest payments by stablecoin issuers also apply to affiliated entities like exchanges, brokers, and dealers.

◆ Limit Non-Bank Issuance
The Act currently allows non-financial companies to issue stablecoins—a shift the banks believe could destabilize the system if not reined in.

◆ Revoke Nationwide Approval
The Act permits state-chartered stablecoin issuers to operate nationally without federal oversight. Banks recommend repealing this to ensure consistent regulatory safeguards.

Broader Industry Context & Momentum

On June 17, the Senate passed the GENIUS Act with bipartisan support, creating the U.S.’s first framework for regulating stablecoins, including requirements like asset-backed reserves and public disclosure of reserve composition. The bill moved to the House for approval shortly thereafter.

Meanwhile, large crypto firms such as Paxos and Circle are moving quickly applying for national trust charters to take advantage of the new regulatory clarity.

Yet, even prominent voices within the crypto and finance space are calling for deeper reform. Analysts worry the current version of the law lacks long-term safeguards, especially around yield and systemic risk.

Final Thoughts

The GENIUS Act marks a groundbreaking shift toward regulated stablecoin usage in the U.S. But as the dust settles, banking groups warn that modern finance—and banks themselves—are on shaky ground unless lawmakers fix key gaps.

Public and private sectors must act fast. Without broader coverage of interest bans and tighter issuer qualifications, the stablecoin experiment could reshape credit markets—without safety nets.