Federated Hermes joins Wall Street's tokenization push with plans for first onchain fund shares
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Summary
Federated Hermes plans to issue its first tokenized fund share classes in early 2027, moving beyond prior third-party tokenization of its products. The Pittsburgh-based investment manager is partnering with Prometheum to provide regulated brokerage, custody, and clearing services for these tokenized investment products. Kevin Barr, the firm's director of digital asset products and platform, indicated money market funds are likely the starting point for tokenization.
Why it matters
The move extends Wall Street's broader adoption of blockchain for traditional investment funds, aiming to modernize asset issuance, transfer, and settlement. Federated Hermes' direct issuance of tokenized fund shares could enhance operational efficiency and expand access to these products via traditional brokerage channels. The source implies tokenization could represent a fundamental upgrade to financial market infrastructure.
Key context
Federated Hermes has previously worked with third parties such as Archax, Goldman Sachs, and Conduit Digital to create tokenized versions of its products, but this initiative will involve issuing tokenized shares directly. Money market funds and U.S. Treasuries have led Wall Street's tokenization efforts, offering 24/7 asset movement and programmability advantages over traditional systems. Despite progress, access through existing brokerage platforms remains a barrier to wider adoption.
Key numbers and entities
Federated Hermes (FHI) manages $911 billion in assets. Prometheum, a New York-based digital securities infrastructure provider, will facilitate brokerage, custody, and clearing. Kevin Barr is Federated Hermes' director of digital asset products and platform. Other industry participants mentioned include BlackRock, Franklin Templeton, JPMorgan, New York Life Insurance Company, Archax, Goldman Sachs (GS), and Conduit Digital. Citi projects the tokenized securities market could reach $5.5 trillion by 2030.
What remains unclear
The source does not specify which specific funds Federated Hermes will tokenize beyond the likely focus on money market funds. The choice of blockchain(s) to be used for issuing the tokenized shares has not been disclosed. Details on how the partnership with Prometheum impacts regulatory compliance or investor protections are not provided.