The move adds another major asset manager drawn to Wall Street’s tokenization effort. Firms including BlackRock, Franklin Templeton, JPMorgan and, more recently, New York Life Insurance Company have embraced blockchain-based versions of traditional funds, betting the technology can modernize how assets are issued, transferred and settled. Using blockchains for investment funds could settle faster, automate recordkeeping and move more easily between financial platforms, proponents say.
Citi has projected that the tokenized securities market could balloon to $5.5 trillion by 2030.
In-house tokenization
Federated Hermes have already experimented with tokenization, and its latest effort goes beyond previous its blockchain initiatives.
The firm has worked with platforms including London-based Archax, Goldman Sachs (GS) and Singapore-based Conduit Digital to create tokenized representations of its existing investment products. Those arrangements involved third parties issuing digital versions of conventional fund holdings.
Federated Hermes now intends to issue tokenized fund share classes itself, Barr said, giving the asset manager a more direct role in bringing its products onchain. Before joining the asset manager in May, Barr spent 15 years at custody banking giant BNY, most recently as head of digital cash and innovation.
The firm’s large liquidity-management business makes money market funds a natural starting point, Barr said. Such funds invest in short-term debt and serve as a place for investors to park cash while earning yield.
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