Legal & General plans to debut in tokenization in the next few months
Key Notes
- L&G might enter the tokenization ecosystem very soon.
- L&G’s tokenization bid will trail that of BlackRock and Fidelity.
- Other crypto firms like Ripple Labs are also exploring the niche.
London-headquartered pension and investment management firm Legal & General (L&G) plans to join the crypto tokenization ecosystem. If this firm, with $1.5 trillion in Assets Under Management (AUM), succeeds with its plan, it would join firms like Ripple Labs, already taking a slice of the growing industry.
Legal & General to Leverage on Tokenization Benefits
Ed Wicks, Global Head of Trading at Legal & General Investment Management (LGIM), L&G’s asset management arm, confirmed the firm’s current phase of evaluating ways to create a tokenized version of its fund. He noted several benefits of this digitization of funds, including improving efficiency and reducing costs. Wicks stated that this move gives more investors access to various investment solutions.
“We look forward to continued progress in this space,” Wicks added.
It is worth noting that this is not L&G’s first foray into the blockchain industry. In fact, its involvement with blockchain dates back to 2019. At the time, the insurer intended to utilize the managed blockchain system from Amazon Web Services (AWS) to manage and record bulk annuities for its insurance business.
The tokenization of Real-world Assets (RWA) has recently become popular among traditional financial service providers. It involves representing conventional assets like U.S. Treasuries-backed money-market funds via tokens on a blockchain. Moreover, the entry of BlackRock Inc (NYSE: BLK) into the industry projected tokenization as a worthy venture.
Wall Street Firms Enters Tokenization Ecosystem
As reported earlier, BlackRock partnered with Securitize in Q1 2024 to launch a tokenized investment fund. Dubbed BlackRock USD Institutional Digital Liquidity Fund (BUIDL), the fund required a minimum investment of $100,000 from outside investors. From inception, the fund estimated sales commissions totaling $525,000, with no finder’s fees disclosed.
BlackRock leveraged the Ethereum blockchain to mint the token behind the fund, further clarifying the product’s nature for investors. In 4 months, BUIDL’s AUM surpassed $500 million, marking a significant milestone for the tokenized fund.
A month after BlackRock developed BUIDL, Franklin Templeton announced its $380 million United States Government Money Fund (FOBXX). This fund was tokenized as BENJI tokens on both the Polygon and Stellar blockchains. The asset manager listed the benefits of the tokenized fund, which include simplified transactions, enhanced liquidity, and democratized access to asset management.
More recently, US-based State Street, a leading financial services company, began exploring tokenized bonds and money market funds. Donna Milrod, the company’s chief product officer, confirmed that both projects are still in their initial stages. Notably, they are expected to run through part of next year.
Ultimately, Wall Street investors are embracing tokenization, a move that suggests that their perspective has shifted dramatically in over a decade. They have a better understanding of the cost-effectiveness and speed of tokenized assets. It potentially revolutionizes asset trading by making it more accessible and it is relatively more efficient.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
