Global fund network, Calastone, has switched on a new service allowing asset managers to convert traditional products into ‘tokenised’, blockchain-friendly vehicles.
In a release last week, the UK-headquartered firm said the Calastone Tokenised Distribution system offers a “frictionless” route for managed funds into the growing blockchain-verse built on protocols such as Ethereum, Polygon, and Canton.
Adam Belding, Calastone chief technology officer, said in the statement: “We make it possible to distribute existing funds via blockchain networks, instantly and at scale without any operational upheaval or technical reinvention.”
The token transformation would give fund managers access to a “fast-growing class of investors that traditional distribution channels do not reach”, the release says, including corporate treasuries, stablecoin issuers and ‘crypto-experienced’ investors.
In a report published last month, Calastone estimated a tokenised takeover of the funds management sectors in the UK, Europe and US would save about US$135 billion in operational costs while significantly speeding-up product creation.
While tokenising the entire funds management world still faces many hurdles, the new blockchain distribution channel would make it easy for investment firms “to evolve with the market”, Calastone chief, Julien Hammerson, said in the release.
The news comes, too, as US-based global post-trade financial infrastructure giant, Depository Trust & Clearing Corporation (DTCC), promo-ed a demo of a new token-based ‘collateral management system’.
DTCC says it will “demo the new platform in a live event” on April 23 to showcase a blockchain-based method of managing institutional collateral across the globe.
The new system offers “a significant opportunity to streamline the flow of collateral across siloed infrastructure, unlocking major capital and operational efficiencies”, the release says.
Dan Doney, DTCC digital assets chief technology officer, said tokenised collateral was the “killer app” for institutional take-up of blockchain.
“By using smart contracts to automate the full range of collateral operations, we enable complex trade execution across markets in real-time at any time, even in volatile conditions,” Doney said.
Larry Fink, BlackRock chief, also name-checked tokenisation as a potential industry game-changer in his annual letter to investors last week.
“Every stock, every bond, every fund—every asset—can be tokenized,” Fink says in the letter. “If they are, it will revolutionize investing. Markets wouldn’t need to close. Transactions that currently take days would clear in seconds. And billions of dollars currently immobilized by settlement delays could be reinvested immediately back into the economy, generating more growth.”
However, Fink said the technologists still have to solve the “one critical problem” of digital identity verification before tokenised funds become the norm.