CoinDesk
Federated Hermes, the $911 billion asset manager, plans to issue its first tokenized fund share classes in early 2027 through a partnership with Prometheum. The products are expected to reach traditional brokerage accounts and financial advisers, although the firm has not disclosed which funds or blockchains it will use. Money-market funds are a likely starting point.
Why it matters
The move gives Federated Hermes a more direct role in tokenization. The firm previously worked with platforms including Archax, Goldman Sachs and Conduit Digital to create tokenized representations of existing products. This time, it plans to issue the blockchain-based share classes itself.
Prometheum will provide regulated brokerage, custody, clearing and settlement services. Its correspondent clearing platform is designed to let other broker-dealers offer the products without rebuilding their distribution systems. Kevin Barr, Federated Hermes' director of digital asset products and platform, said access through existing financial channels remains a larger adoption barrier than the underlying blockchain technology.
Market impact
Money-market funds and U.S. Treasuries have led Wall Street's tokenization push because they provide yield-bearing assets that can move around the clock. Tokenized fund shares could also support programmable transfers and allow investors to use holdings as collateral without selling them.
BlackRock, Franklin Templeton, JPMorgan and New York Life have pursued similar blockchain-based products. Citi has projected that tokenized securities could reach $5.5 trillion by 2030, while Federated Hermes' entry adds another large traditional asset manager to the institutional market. The next key details are the funds selected, the blockchain infrastructure and how quickly brokerages make the products available.
Frequently asked questions
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When will Federated Hermes issue its first tokenized fund shares?
Federated Hermes plans to issue its first tokenized fund share classes in early 2027.
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Which Federated Hermes funds will be tokenized first?
The firm has not disclosed which funds it will tokenize. Money-market funds are a likely starting point.
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What role will Prometheum play in the tokenized funds?
Prometheum will provide regulated brokerage, custody, clearing and settlement services, as well as correspondent clearing for other broker-dealers.
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How does this differ from Federated Hermes' earlier tokenization work?
Federated Hermes previously worked with third parties to create tokenized representations of existing products. It now plans to issue tokenized share classes itself.
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Why are money-market funds central to Wall Street's tokenization push?
Money-market funds provide yield-bearing assets that can move around the clock. Tokenized versions may also support programmable transfers and collateral use without requiring a sale.
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