British asset management companies and exchanges focusing on MMF tokenization ─ TradFi tokenization race progresses | CoinDesk JAPAN

Imagine a token that represents ownership in a money market fund (MMF), functions like a stablecoin that generates yield, and can also serve as collateral for transactions.

British investment firm Aberdeen (abrdn) and exchange Archax are joining the race to tokenize traditional assets.

Archax, one of the first crypto companies to be regulated by the UK Financial Conduct Authority (FCA), and Aberdeen, which has $626 billion in assets under management (approximately 94 trillion yen, exchanged at 150 yen to the dollar), announced in October , has started operating institutional grade MMF tokens. The companies are currently leveraging this token to attract customers looking for new and flexible ways to allocate capital.

Large financial companies have realized that there are many operational efficiencies and cost savings to be found in representing assets on blockchain, but few have made it much beyond the conceptual testing stage.

Archax chief marketing officer Simon Barnby said in an interview that customers must onboard themselves and whitelist their wallets, and that the tokens are only available to professional investors.

Tokenize MMF

However, Aberdeen Fund’s tokenized MMF, which uses Hedera Hashgraph as its blockchain, can be purchased for as little as $5,000, potentially expanding its clientele to a new investor base.

“There is approximately $400 million in potential customer assets and their interest is thoroughly piqued. Many payments companies and holdings in non-yielding stablecoins like USDC and USDT. We’re talking to people: When interest rates were low, corporate treasury departments didn’t care as much about where their money was and whether it was generating returns. But now they’re putting their assets to good use. We want to do that,” Barnby said.

The advent of a high interest rate environment is changing the pattern of innovation. Not only are tokenization plans focusing on easy-to-handle assets like government bonds accelerating, but they are also receiving a response from DeFi (decentralized finance), with new models of yield-producing stablecoins becoming a trend. It has become.

Archax will introduce a trading pair of Aberdeen MMF token and Bitcoin (BTC) early next year. This means that instead of trading Bitcoin against the US dollar or USDC, users will be able to trade Bitcoin against USD MMF tokens.

To use as collateral

Although the companies haven’t announced it publicly yet, the next step is clearly to use MMF tokens as collateral.

“This can happen in the DeFi world, where you borrow against assets or lend assets,” Barnby said.

“Tokens representing ownership in MMFs could potentially be used as collateral in areas like regulated DeFi, which we will be keeping an eye on as we move into 2024.”

The somewhat shrinking world of DeFi is interesting, but still a fraction of the size of traditional markets.

Aberdeen has a number of financial products that can be tokenized, said Duncan Moir, head of alternative investments at Aberdeen. He said he wanted to start with something “easy to understand” that was already in demand, assuming it was aimed at crypto-native investors.

“An alternative to stablecoins that yielded a 5% yield was an easy product to come up with,” More said. He added that after discussions with more financial institutions, it became clear that using it for collateral could be a bigger use case.

“Swap dealers accept MMFs, so they can be used to post margin on swap trades, for example. In the future, we are interested in whether they can be used to settle tokenized securities. Tokenization I can certainly imagine a future where there are other such funds, and trading them as cash assets makes a lot of sense.”

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: Shutterstock
｜Original text: Asset Manager Abrdn, Crypto Exchange Archax Strive for Pole Position in Race to Tokenize TradFi