24/7 financial rails: How BNY plans to eliminate the weekend lag in U.S. Treasuries

BNY Mellon, the world’s largest custody bank, plans to enable 24/7 settlement for both conventional and tokenized U.S. Treasuries by 2027. This initiative follows a successful after-hours test that involved reserves from two stablecoin issuers, Ripple’s RLUSD and OpenEden’s USDO. In the test, a Treasury trade was completed after the usual Fedwire Securities settlement system had closed for the day, demonstrating the potential for round-the-clock Treasury activity linked to stablecoin reserves.

The bank intends to begin testing tokenized Treasuries on a private blockchain by the end of the current year and will also expand its settlement network later this year to cover additional trading hours across Asia, Europe, and the U.S. In the test transaction, although the securities themselves were not tokenized, the process showed that Treasury-related transactions could settle through existing cash management operations even outside standard market hours. BNY's cash-management unit, Dreyfus, acted on behalf of OpenEden during this after-hours transaction, and trade execution was handled by Tradeweb.

Stablecoins like RLUSD and USDO use short-dated U.S. government debt as reserve assets, which currently depend on weekday settlement windows. This limitation can delay important reserve adjustments needed after significant stablecoin creation, redemption, or collateral calls. BNY’s move to create 24/7 settlement capabilities aims to eliminate these delays by enabling Treasury transactions to be settled continuously, reducing lag caused by the existing weekend and after-hours gaps in the U.S. Treasury market. This development could significantly enhance liquidity and efficiency in the stablecoin and Treasury markets, according to the bank's communications.