As a seasoned analyst with over two decades of experience in the financial industry, I have witnessed numerous transformations that reshape the landscape. The latest development – traditional giants like Legal & General joining the crypto tokenization ecosystem – is yet another significant shift that promises to revolutionize asset trading.
As a researcher, I’m excited to share that London-based pension and investment giant Legal & General (L&G) is planning to dive into the crypto tokenization landscape. With an impressive $1.5 trillion in Assets Under Management (AUM), if successful, L&G would be joining pioneers like Ripple Labs, already making their mark in this rapidly expanding sector.
Legal & General to Leverage on Tokenization Benefits
Ed Wicks, who serves as Global Head of Trading at Legal & General Investment Management (LGIM), the asset management division of L&G, has confirmed that they are in the process of assessing methods to develop a tokenized variant of their fund. Wicks highlighted several advantages of this digital transformation, such as increasing efficiency and lowering costs. He added that this step would provide more investors with access to various investment options.
“We look forward to continued progress in this space,” Wicks added.
It’s important to mention that this isn’t L&G’s initial venture into the blockchain sector; their association with blockchain actually stretches back to 2019. During this period, they planned to leverage Amazon Web Services’ managed blockchain system to handle and document bulk annuities for their insurance operations.
The process of converting real-world assets, such as U.S. Treasury-backed money market funds, into digital tokens on a blockchain has gained significant attention from traditional financial service providers lately. Furthermore, the entrance of BlackRock Inc (NYSE: BLK) into this sector underscores the potential value and credibility of tokenization in the industry.
Wall Street Firms Enters Tokenization Ecosystem
In Q1 2024, as previously mentioned, BlackRock collaborated with Securitize to introduce a tokenized investment fund called the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). This fund demanded an initial investment of $100,000 from external investors. The total estimated sales commissions amounted to $525,000, and no finder’s fees were disclosed since the start.
BlackRock utilized the Ethereum blockchain to create the token connected with the fund, providing more transparency about the product’s character to investors. Within 4 months, the assets under management (AUM) of BUIDL exceeded $500 million, signifying a substantial achievement for the tokenized investment fund.
Approximately a month following BlackRock’s creation of BUIDL, Franklin Templeton unveiled its $380 million U.S. Government Money Fund (FOBXX). This fund was converted into BENJI tokens, which are now available on both the Polygon and Stellar blockchains. The asset manager highlighted several advantages of this tokenized fund, such as streamlined transactions, increased liquidity, and broader access to asset management for a wider audience.
Lately, a prominent American financial services firm, State Street, has started investigating tokenized bonds and money market funds. Donna Milrod, who holds the position of chief product officer, affirmed that these projects are currently in their early stages. Significantly, they are anticipated to continue into part of the coming year.
In essence, Wall Street investors are increasingly adopting tokenization, indicating a significant shift in their viewpoint over the past decade. This embrace stems from a growing awareness of the cost-savings and speed associated with tokenized assets. It could potentially transform the trading landscape by making it more approachable and operationally smoother.
Read More
Sorry. No data so far.
2024-10-21 15:32