Moody’s reveals a major rise in blockchain-based tokenized funds, emphasizing effectivity features and technological dangers.
In a latest report, world monetary providers powerhouse Moody’s highlighted the burgeoning realm of blockchain-based tokenized funds.
Moody’s underscores the effectivity features in investing belongings like authorities bonds by tokenized funds, noting an untapped market potential. Nonetheless, they warning in regards to the tech-related dangers, emphasizing the necessity for fund managers to own broader technological experience.
The surge in fixed-income tokenized funds is basically pushed by investments in authorities securities, a pattern accelerated by latest U.S. Federal Reserve rate of interest hikes. Remarkably, tokenized fund issuance backed by such securities swelled from $100 million to over $800 million on public blockchains by the tip of 2023.
The most important issuance was carried out by Franklin Templeton, Moody’s reported, referring to their U.S. Authorities Cash Fund registered on the Stellar (XLM) and Polygon (MATIC) blockchains.
Different monetary establishments like Swiss-based Backed Finance and UBS are additionally exploring this house. Moody’s means that within the absence of stablecoins or central bank digital currencies, tokenized cash market funds may function stablecoin collateral options in defi markets.
Moody’s additionally talked about SC Ventures’ launch of the tokenization platform Libeara and Nomura’s Laser Digital’s unveiling of the Libre protocol for Brevan Howard and Hamilton Lane funds.
Tokenized funds, whereas just like conventional bond funds in funding technique, differ of their digital format. These digital tokens on distributed ledgers improve liquidity, lower prices, and allow fractionalization. Nonetheless, they introduce complexities and dangers alongside the advantages, resembling technological failures and publicity to stablecoin volatility.
The report concludes that tokenized funds current technology-driven efficiencies, however the supporting framework wants additional improvement and standardization.