BNY Opens Treasury-Backed Reserve Fund for U.S. Stablecoin Issuers
BNY Targets Stablecoin Issuers With New Fund
BNY has launched a money market fund aimed at holding reserves for U.S. stablecoin issuers, becoming the first major bank to roll out such a vehicle under the country’s new federal framework for digital dollars.
The fund, announced Thursday, is open to U.S. stablecoin issuers and other institutional investors acting in fiduciary, agency, advisory, brokerage or custodial capacities. It is designed to hold cash reserves required by the GENIUS Act, the July 2025 law establishing federal oversight for payment stablecoins and setting standards for reserve composition.
According to its filings, the fund will invest in short-term U.S. Treasurys, overnight repurchase agreements backed by Treasurys or cash, and direct cash holdings. It aims to maintain a stable $1 share price and 99.5% exposure to government-backed instruments. BNY said shares in the fund may serve as backing assets for stablecoins issued under the new law.
Investor Takeaway
Anchorage Digital Joins as First Investor
Anchorage Digital, the federally chartered digital asset bank, made the fund’s first investment. Co-founder and CEO Nathan McCauley called the initiative “essential to bridging the trust, transparency, and regulatory rigor that will define the next era of digital finance.”
BNY’s move reflects the banking industry’s cautious entry into stablecoin reserve management later than the GENIUS Act clarified custody and backing rules. Banks can now hold reserves for stablecoin issuers provided they are invested in U.S. government securities or cash equivalents and subject to real-time auditability requirements.
The launch also builds on BNY’s growing digital asset strategy. In June, the bank partnered with Securitize to develop a tokenized fund offering exposure to AAA-rated collateralized loan obligations onchain. Earlier this year, Bloomberg reported that BNY was exploring tokenized deposits to connect its $2.5 trillion daily payments network to blockchain systems.
Stablecoin Market Expands Under New Rules
The timing of the launch coincides with rapid growth in the stablecoin sector. Data from DefiLlama shows total stablecoin capitalization at over $305 billion, with BNY analysts forecasting the market could reach $1.5 trillion by 2030. Analysts say the GENIUS Act’s passage has opened the door for regulated issuers to expand operations with backing from traditional financial institutions.
While Tether’s USDT and Circle’s USDC remain dominant, new entrants are emerging. In March, World Liberty Financial, a crypto venture backed by former U.S. President Donald Trump, launched USD1, which now ranks as the seventh-largest stablecoin with $2.86 billion in circulation. In August, MetaMask introduced mUSD, a dollar-backed token integrated into its Web3 wallet.
Investor Takeaway
Global Competition Intensifies
Activity isn’t limited to the U.S. In Europe, nine banks met in September to develop a euro-denominated stablecoin intended to rival the dollar’s dominance in digital payments, with a launch targeted for the second half of 2026. Similar initiatives are under way in the Middle East and Asia, as regulators race to integrate blockchain settlement into traditional finance.
BNY’s new fund places the world’s oldest bank at the center of that shift. By creating a compliant channel for holding stablecoin reserves, the firm is positioning itself as a key intermediary between issuers and the U.S. Treasury market—a bridge that could determine how digital dollars interact with the broader financial system.
