U.K. Asset Managers Progress Fund Tokenization
RWA Signal Insight
U.S. TreasuriesMajor U.K. asset managers are rapidly adopting fund tokenization to enhance operational efficiency and distribution capabilities. Aviva Investors recently launched a tokenized share class for its US Dollar Liquidity Fund in partnership with Ripple, marking a regulatory first approved by the Central Bank of Ireland. Similarly, Schroders received approval from the Central Bank of Ireland to launch its 'Schroders Onchain Active Returns' fund, utilizing Kinexys by J.P. Morgan for smart contract-based redemptions. Legal & General Asset Management has also integrated its £50 billion liquidity fund suite into the Calastone Tokenised Distribution Network to streamline access. These developments signal a shift toward using tokenized money market funds as collateral in high-volume trading environments. By leveraging blockchain infrastructure, these firms aim to reduce idle liquidity and improve settlement times for institutional investors. This trend highlights the growing institutional focus on adapting established, regulated financial products to digital distribution channels.
Key points
- Aviva Investors launched a tokenized US Dollar Liquidity Fund share class using Ripple infrastructure.
- Schroders received Irish regulatory approval for a tokenized money market fund via Kinexys.
- Legal & General made £50 billion in liquidity assets available via Calastone's tokenization network.
- Institutions are increasingly utilizing tokenized money market funds as yield-bearing collateral for trading.
Background
Tokenized money market funds represent traditional, regulated investment vehicles where ownership shares are recorded on a blockchain. This structure allows for near-instant settlement, 24/7 transferability, and the ability to use fund units as collateral in digital asset markets. By moving these assets on-chain, managers aim to reduce the operational friction associated with legacy transfer agency and settlement systems.