Tokenized money market funds and U.S. Treasuries have spearheaded Wall Street’s tokenization efforts, allowing companies and institutional investors to earn yield on cash reserves while moving assets around the clock. The tokens can also serve as collateral for loans or trades, helping firms put their cash to work without selling their holdings.
“You can have instantaneous movement of those funds,” Barr said. “You can have programmability of those funds in a way that is perhaps more difficult or operationally inefficient with traditional infrastructure.”
Brokerage accounts access
A key part of the Prometheum partnership is making those products available through familiar investment channels.
Prometheum’s SEC-registered broker-dealer subsidiaries will provide custody, clearing and settlement services, while its correspondent clearing platform will allow other broker-dealers to offer Federated Hermes’ tokenized products to their customers.
Barr said one of the main barriers to wider adoption has been access, rather than the underlying blockchain technology. Financial advisers and brokerages need ways to offer tokenized funds without rebuilding their systems.
“For us, it becomes a natural extension of how we distribute our products today, and it just makes all the sense of the world from that perspective,” Barr said.
For Federated Hermes, the longer-term opportunity extends beyond distributing existing investment products in a new format. Barr said he sees tokenization changing how investors manage cash, move between assets and build portfolios.
