Key Takeaways
- • Federated Hermes ($911.6 billion AUM as of end-June 2026) has formed a strategic partnership with Prometheum and plans to issue its first tokenized fund in Q1 2027, according to the primary report.
- • The firm is shifting from third-party tokenization (Archax, Goldman Sachs, Conduit Digital) to direct in-house issuance of tokenized share classes.
- • Money market funds are the expected starting point, aligning with the firm's liquidity funds franchise, which Kevin Barr describes as the core of its business.
- • Prometheum's SEC-registered broker-dealer subsidiary will provide custody, clearing and settlement, letting other broker-dealers and advisors offer the products to clients via correspondent clearing.
- • Federated Hermes has not yet disclosed which funds it will tokenize or which blockchain it will use.
Summary
Federated Hermes, the Pittsburgh-based U.S. asset manager (NYSE: FHI), announced on October 13, 2026 a strategic partnership with Prometheum, a provider of blockchain-based securities market infrastructure, and plans to issue its first tokenized fund in the first quarter of 2027. The firm reported $911.6 billion in assets under management as of the end of June 2026, approximately ¥144 trillion according to the primary source's conversion.
The initiative marks a shift in strategy. Federated Hermes previously worked with partners including UK-based Archax, Goldman Sachs and Singapore's Conduit Digital, who issued digital versions of its existing funds. Under the new approach, the firm itself will directly issue tokenized share classes of its funds. Kevin Barr, Director of Digital Asset Products and Platforms, said money market funds are a strong starting point, citing "tremendous interest across the industry in tokenized MMFs" and their alignment with the firm's liquidity funds. Barr joined Federated Hermes in May 2026 after 15 years at BNY, most recently as head of its Digital Cash & Innovation division.
Barr identified distribution access, rather than blockchain technology, as the primary barrier to tokenized fund adoption. Prometheum's SEC-registered broker-dealer subsidiary will handle custody, clearing and settlement, and through its correspondent clearing platform, other broker-dealers will be able to offer Federated Hermes' tokenized products to clients without overhauling existing systems. Barr described this as "a natural extension of how we currently distribute products."
Tokenized money market funds and U.S. Treasuries have led Wall Street's tokenization efforts, offering yield on cash reserves and 24/7 asset movement, with tokens usable as collateral for loans and trades. Federated Hermes joins BlackRock, Franklin Templeton, JPMorgan and New York Life Insurance in pursuing blockchain-based fund versions. Citigroup projects the tokenized securities market will reach $5.5 trillion by 2030. Federated Hermes has not disclosed which funds it will tokenize or which blockchain it will use.
The initiative marks a shift in strategy. Federated Hermes previously worked with partners including UK-based Archax, Goldman Sachs and Singapore's Conduit Digital, who issued digital versions of its existing funds. Under the new approach, the firm itself will directly issue tokenized share classes of its funds. Kevin Barr, Director of Digital Asset Products and Platforms, said money market funds are a strong starting point, citing "tremendous interest across the industry in tokenized MMFs" and their alignment with the firm's liquidity funds. Barr joined Federated Hermes in May 2026 after 15 years at BNY, most recently as head of its Digital Cash & Innovation division.
Barr identified distribution access, rather than blockchain technology, as the primary barrier to tokenized fund adoption. Prometheum's SEC-registered broker-dealer subsidiary will handle custody, clearing and settlement, and through its correspondent clearing platform, other broker-dealers will be able to offer Federated Hermes' tokenized products to clients without overhauling existing systems. Barr described this as "a natural extension of how we currently distribute products."
Tokenized money market funds and U.S. Treasuries have led Wall Street's tokenization efforts, offering yield on cash reserves and 24/7 asset movement, with tokens usable as collateral for loans and trades. Federated Hermes joins BlackRock, Franklin Templeton, JPMorgan and New York Life Insurance in pursuing blockchain-based fund versions. Citigroup projects the tokenized securities market will reach $5.5 trillion by 2030. Federated Hermes has not disclosed which funds it will tokenize or which blockchain it will use.
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