BNY has filed a prospectus with the US Securities and Exchange Commission (SEC) for the BNY Dreyfus Stablecoin Reserves Fund, which will invest in US Treasury (UST) securities, overnight repurchase agreements collateralized solely by USTs, and cash. It will be the third US financial institution to move into stablecoin reserves for issuers after BlackRock and Goldman Sachs.
BNY’s fund will be a money market fund subject to the maturity, quality, liquidity and diversification requirements of Rule 2a-7 under the Investment Company Act of 1940 and seeks to maintain a stable share price of $1.00. The USTs in which the fund invests have a maturity of 93 days or less, according to the prospectus.
The repurchase agreements in which the fund may invest include tri-party repurchase agreements executed through a third-party bank that provides payment administration, collateral custody and management services to the parties to the repos.
Among the risks, BNY identified stablecoin reserve risk. Shares of the fund are intended to be held by stablecoin issuers as reserves backing their outstanding payment stablecoins. The assets of the fund are therefore expected to fluctuate depending on the creation (minting) of additional stablecoins or the redemption (burning) of such stablecoins.