BNY and Citadel Use Tokenized Treasury for Repo Financing
The deal marks the first use of tokenized assets on a major triparty repo platform, with a two-year U.S. Treasury note settled within minutes before its tokenized representation secured overnight financing.
BNY and Citadel Securities have completed what the bank describes as the first use of tokenized assets on a major triparty repurchase agreement (repo) platform, putting tokenization to work in an established financial-market process.
Announced on October 14, the transaction involved a two-year U.S. Treasury note that was purchased through BNY on Tradeweb, a financial markets platform. BNY then recorded a tokenized representation of the security on its private digital ledger, enabling settlement within minutes rather than the standard T+1 settlement cycle, which generally requires one business day.
The transaction went beyond digital recordkeeping. Citadel Securities subsequently used the tokenized Treasury as collateral in an overnight repo, receiving cash from BNY in return.
How the Tokenized Treasury Transaction Worked
The deal combined securities settlement with short-term secured financing in a single institutional workflow.
Its main steps were:
- Treasury purchase: Citadel Securities bought a two-year U.S. Treasury note through BNY on Tradeweb.
- Tokenization and settlement: BNY recorded a tokenized representation of the note on its private digital ledger and completed settlement within minutes.
- Collateral financing: Citadel Securities pledged the tokenized Treasury in an overnight triparty repo and received cash from BNY.
A repo, or repurchase agreement, is a form of short-term secured financing in which one party provides securities in exchange for cash and agrees to reverse the transaction later. An overnight repo generally runs until the next business day.
In a triparty arrangement, a third-party institution helps administer the transaction and manage the collateral. In this case, BNY provided the cash while supporting the transaction’s institutional infrastructure.
The key development is that the tokenized security was actually used to obtain financing, rather than simply being represented digitally or transferred between participants.
Why Tokenization Could Matter for Financial Markets
U.S. Treasury securities are widely used as collateral in financial markets. The ability to settle a Treasury transaction quickly and then use the asset to secure financing could help institutions reduce the operational delays between acquiring securities and accessing cash.
Traditional settlement processes can create a gap between a transaction being agreed and the assets becoming available for subsequent use. Tokenized representations could help narrow that gap when the necessary settlement and financing infrastructure is integrated.
The BNY-Citadel transaction illustrates this potential by connecting two established activities: securities settlement and collateralized borrowing. Instead of treating tokenization as a standalone digital asset initiative, the workflow incorporated it into an existing institutional financing process.
However, one transaction does not establish that tokenization will eliminate settlement delays across financial markets. The workflow relied on BNY’s private digital ledger, and broader adoption will depend on scalability, integration with existing systems, and participation from other market institutions.
BNY Expands Its Digital Asset Infrastructure
The transaction builds on BNY’s broader efforts to introduce tokenized financial services for institutional clients.
In January, the bank launched a tokenized deposit service for institutions including Citadel Securities, Intercontinental Exchange (ICE), and Ripple Prime. The service creates blockchain-based representations of client deposits held at the bank, supporting potential applications such as collateral and margin transactions.
BNY is not pursuing this strategy alone. JPMorgan launched its JPM Coin deposit token for institutional clients in November 2025. Separately, a consortium of major U.S. banks, including JPMorgan and Citigroup, plans to introduce a tokenized deposit network as early as the first half of 2027.
BNY has also outlined plans to introduce additional digital cash and tokenized deposit capabilities for institutional settlement and financing. The bank expects to extend operating hours for platforms handling Federal Reserve-eligible securities and U.S. triparty transactions, with expansion into European and Asian trading hours planned for 2027.
Carolyn Weinberg, BNY’s Chief Innovation & Market Transformation Officer, highlighted the significance of integrating tokenization into established financial workflows.
“This transaction demonstrates what becomes possible when tokenized assets are used in institutional workflows,” Carolyn Weinberg said. “By using a tokenized representation of a U.S. Treasury across both settlement and financing, we are enabling a more connected, efficient, and always-on financial system.”
From Digital Assets to Core Financial Infrastructure
BNY and Citadel Securities’ transaction provides a practical example of how tokenization could extend beyond issuing and trading digital representations of traditional assets. By linking rapid settlement with collateral-based financing, the workflow demonstrates how tokenized securities could become more useful within existing financial markets.
The next challenge is moving from a successful institutional transaction to broader adoption. Whether similar arrangements can operate reliably across institutions and platforms will help determine how significantly tokenization changes the way financial markets settle securities and distribute liquidity.
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