L&G Tokenizes Liquidity Funds on Ethereum Network

coinmarketcap.com2 min read
L&G Tokenizes Liquidity Funds on Ethereum Network
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Legal & General, a major British financial services firm, has announced the tokenization of its liquidity funds on the Ethereum blockchain. These funds, which manage over £50 billion in assets denominated in USD, EUR, and GBP, focus on short-term, high-quality instruments like government bonds and bank deposits. The initiative utilizes infrastructure provided by Calastone, a subsidiary of SS&C Technologies, to manage token creation, settlement, and reconciliation for institutional investors. By offering permissioned digital share classes, the firm aims to provide same-day liquidity while maintaining capital preservation. This move follows similar tokenization efforts by industry leaders such as BlackRock, Franklin Templeton, and WisdomTree, signaling a broader institutional shift toward blockchain-based fund distribution. While the Bank for International Settlements has cautioned about potential liquidity mismatches between instant token transfers and underlying asset settlement, the U.K. Financial Conduct Authority is actively developing a regulatory framework for 2027. This development represents a significant expansion of the RWA market, as traditional asset managers increasingly leverage EVM-compatible networks to modernize institutional investment access.

Key points

  • Legal & General tokenizes liquidity funds managing over £50 billion on Ethereum.
  • Calastone infrastructure facilitates token creation and settlement for 4,500 global institutions.
  • FCA targets 2027 for formal regulatory framework regarding digital asset custody and trading.
  • BIS warns of potential liquidity risks from gaps between token transfers and asset settlement.

Background

Legal & General is a multinational financial services and asset management company based in the United Kingdom. The firm specializes in insurance, pensions, and investment management, serving as a major institutional player in global capital markets. Their liquidity funds are designed to provide low-risk, cash-equivalent returns for institutional clients by investing in highly liquid, short-term debt instruments.

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