BNY and Citadel Securities have completed a triparty repurchase agreement using a tokenized representation of a 2-year U.S. Treasury note as collateral, an arrangement BNY said marked the first use of tokenized assets on a major triparty repo platform. The Treasury representation settled within minutes on BNY’s private digital ledger, rather than through the standard T+1 securities settlement timetable.
The transaction puts tokenized collateral into one of Wall Street’s most routine funding markets: the overnight repo market, where firms borrow cash against high-quality securities. Faster movement of Treasury collateral could give dealers and large financial firms more flexibility in managing intraday liquidity, particularly when cash and securities need to be repositioned quickly.
Citadel Securities bought the 2-year Treasury through BNY on Tradeweb, according to BNY’s statement. BNY then recorded a tokenized version of the security on its digital ledger and completed settlement. Citadel Securities used that tokenized Treasury in an overnight triparty repo, receiving cash from BNY against the collateral.
A Treasury moves from trade to financing in minutes
The workflow connected three stages that are usually handled through separate operational processes: purchasing a Treasury, settling the security, and using it as collateral to raise short-term cash. BNY’s digital ledger allowed the tokenized representation to be available for the repo transaction within minutes after settlement, the bank said.
A triparty repo uses an intermediary bank to administer collateral between the cash lender and borrower. In conventional markets, that intermediary handles tasks including collateral valuation, allocation, custody, and settlement. BNY’s role in the transaction placed those established triparty functions alongside a tokenized record of the underlying Treasury.
The arrangement did not replace the U.S. Treasury note itself with a public blockchain token. BNY described the instrument as a tokenized representation recorded on its private digital ledger. That distinction places the project closer to institutional settlement infrastructure than to the open, permissionless networks typically associated with cryptocurrency trading.
For Citadel Securities, the process showed how a Treasury acquired in the market could be converted into funding collateral without waiting for a next-day settlement window. For BNY, it offers a practical test of whether its ledger can support the daily financing machinery that underpins market-making and securities trading.
Deposit tokens provide the cash leg
BNY’s Treasury experiment follows the bank’s January launch of a tokenized deposit service for institutional clients. The service creates blockchain-based representations of deposits held at BNY, which the bank says can be used in transactions involving collateral and margin.
Citadel Securities, Intercontinental Exchange and Ripple Prime were among the clients included in that service, according to BNY. Deposit tokens are designed to represent money already held within a bank, rather than a separate stablecoin backed by reserves outside the banking system.
That structure could make deposit tokens more useful inside existing institutional workflows. A tokenized deposit remains linked to a customer’s bank deposit while allowing the digital representation to move through an approved ledger environment. In theory, the same infrastructure can coordinate digital cash with tokenized securities, reducing the number of manual reconciliations needed between trading, custody, collateral, and financing systems.
BNY said it intends to add further digital-cash and tokenized-deposit capabilities for institutional settlement and financing. The bank also plans to extend the operating hours of settlement platforms handling Federal Reserve-eligible securities and U.S. triparty transactions, with coverage across European and Asian trading hours planned for next year.
Longer operating hours would address a limitation of traditional dollar funding and securities settlement systems: international trading desks often operate outside the main U.S. processing day. A digital ledger can record transfers quickly, but its practical value depends on associated cash, custody, risk, and legal processes being available at the same time.
Banks build tokenized deposit systems
BNY’s project arrives as major banks explore deposit tokens and tokenized securities for internal and institutional use. JPMorgan introduced its JPM Coin deposit-token offering for institutional clients in November 2025, according to the supplied materials. A consortium of major U.S. banks that includes JPMorgan and Citigroup is also planning a tokenized deposit network that could launch as early as the first half of 2027.
The common objective is less about creating another tradeable digital asset than improving how regulated institutions transfer money and collateral within controlled networks. Bank-issued deposit tokens could preserve compliance, customer identification, and balance-sheet treatment while making some transfers programmable and available outside standard processing windows.
Government debt has become a focal point for tokenization because Treasuries already serve as widely accepted collateral across the financial system. A short-dated Treasury token can potentially support settlement, secured lending, margin, or liquidity operations, provided the legal claim, custody arrangement, and redemption process are clearly defined.
The supplied materials cited market forecasts projecting tokenized real-world assets could reach $2 trillion by 2028, from $35 billion at the end of last year. They also put tokenized government notes at nearly $13 billion by mid-2026. Those projections depend heavily on whether banks, custodians, asset managers, and market utilities adopt interoperable operating standards rather than building isolated systems.
BNY’s repo transaction offers a more concrete measure of progress than broad tokenization forecasts. It tested whether a tokenized Treasury could serve as collateral in an overnight financing arrangement involving an established dealer, a major custodian bank, and a conventional trading venue. The next challenge will be moving from a completed workflow to repeated transactions that can operate reliably across more counterparties, currencies, asset types, and time zones.
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