BNY Debuts Stablecoin-Focused Money Market Fund

BNY has introduced a money market fund aimed at bolstering stablecoin adoption.

The bank’s Dreyfus Stablecoin Reserves Fund, announced Thursday (Nov. 13), was designed to promote digital asset adoption in the liquidity space.

According to a BNY news release, the fund is designed to hold the reserves for stablecoins to be issued under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, but does not invest in stablecoins.

The release noted the stablecoin market’s potential for growth in the wake of the GENIUS Act, which provides a regulatory framework for US stablecoin issuers, pointing to analysis suggesting that the market for the digital currencies could reach $1.5 trillion by 2030.

“Cash is the cornerstone of the digital asset ecosystem, enabling global capital markets to move toward an always-on, 24/7 environment,” said Stephanie Pierce, deputy head of BNY Investments. “Stablecoins are at the forefront of this profound transformation, and we are proud to provide our liquidity leadership and expertise to stablecoin issuers with the launch of the BNY Dreyfus Stablecoin Reserves Fund.”

As part of the launch, the fund has secured an investment from Anchorage Digital, a cryptocurrency platform that is the first federally chartered crypto bank in the U.S.

“Anchorage Digital is proud to provide the initial investment for this important initiative,” stated Nathan McCauley, Anchorage’s co-founder and CEO. “BNY’s leadership in liquidity and the GENIUS Act framework together mark a new chapter for stablecoin infrastructure in the U.S…we see efforts like this as essential to bridging the trust, transparency, and regulatory rigor that will define the next era of digital finance.”

BNY’s fund is the latest example of the increasing role stablecoins — a type of cryptocurrency pegged to assets like the U.S. dollar — play in the world of banking. As covered here last month, banks and payment networks are increasingly weaving the coins into settlement rails trusted by treasurers and corporations.

“Traditional cross-border payments are cumbersome,” PYMNTS wrote. “A payment may travel through multiple correspondent banks, each charging fees, performing compliance holds and holding prefunded balances in various jurisdictions. This leads to multiday settlement, foreign exchange slippage, float costs, limited transparency and reconciliation burden.”

Stablecoins on blockchain rails work to ease these frictions directly. Because they are typically pegged to fiat currencies, volatility is minimized, which means settlement “can become atomic and near instant,” the report added.