Key Takeaways
- • Federated Hermes, which manages $911 billion in assets according to CoinDesk, plans to launch its first tokenized fund share classes in early 2027 through traditional brokerage channels.
- • The firm is partnering with Prometheum, whose SEC-registered broker-dealer subsidiaries would provide custody, clearing and settlement, while its correspondent clearing platform would let other broker-dealers distribute the products to clients.
- • Money market funds are the likely initial focus, aligning with Federated Hermes' liquidity franchise, according to Kevin Barr, the firm's director of digital asset products and platform.
- • The plan marks a shift from earlier third-party tokenization arrangements with Archax, Goldman Sachs and Conduit Digital to direct issuance of tokenized share classes by Federated Hermes itself.
- • The firm has not yet disclosed which funds it will tokenize or which blockchains it will use.
Summary
Federated Hermes plans to issue blockchain-based share classes of its funds in early 2027, distributed through traditional brokerages and financial advisers, according to CoinDesk. The Pittsburgh-based manager oversees $911 billion in assets. It has not yet disclosed which funds will be tokenized or which blockchains will be used.
The initiative centers on a partnership with Prometheum. Prometheum's SEC-registered broker-dealer subsidiaries are set to provide custody, clearing and settlement services, while its correspondent clearing platform is designed to allow other broker-dealers to distribute Federated Hermes' tokenized products to their clients. Kevin Barr, director of digital asset products and platform at Federated Hermes, said money market funds are a likely starting point because they align closely with the firm's liquidity franchise.
The plan goes beyond the firm's earlier tokenization efforts. Federated Hermes has previously tested tokenization through arrangements with Archax, Goldman Sachs and Conduit Digital, in which third parties issued digital representations of existing investment products. Under the new structure, Federated Hermes would issue the tokenized share classes directly.
The move follows a broader industry shift in which BlackRock, Franklin Templeton and New York Life Insurance Company are also pursuing blockchain-based versions of traditional funds. Supporters argue the infrastructure can speed settlement, automate recordkeeping and make assets easier to transfer across platforms. Tokenized money market funds and U.S. Treasuries remain leading use cases because they let institutional investors earn yield on cash reserves while keeping those assets available around the clock. Barr said the longer-term opportunity extends to changes in how investors manage cash, shift between assets and build portfolios.
The initiative centers on a partnership with Prometheum. Prometheum's SEC-registered broker-dealer subsidiaries are set to provide custody, clearing and settlement services, while its correspondent clearing platform is designed to allow other broker-dealers to distribute Federated Hermes' tokenized products to their clients. Kevin Barr, director of digital asset products and platform at Federated Hermes, said money market funds are a likely starting point because they align closely with the firm's liquidity franchise.
The plan goes beyond the firm's earlier tokenization efforts. Federated Hermes has previously tested tokenization through arrangements with Archax, Goldman Sachs and Conduit Digital, in which third parties issued digital representations of existing investment products. Under the new structure, Federated Hermes would issue the tokenized share classes directly.
The move follows a broader industry shift in which BlackRock, Franklin Templeton and New York Life Insurance Company are also pursuing blockchain-based versions of traditional funds. Supporters argue the infrastructure can speed settlement, automate recordkeeping and make assets easier to transfer across platforms. Tokenized money market funds and U.S. Treasuries remain leading use cases because they let institutional investors earn yield on cash reserves while keeping those assets available around the clock. Barr said the longer-term opportunity extends to changes in how investors manage cash, shift between assets and build portfolios.
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