Investment manager BNP Paribas AM introduces natively tokenized shares of a Money Market fund on Allfunds platform
BNP Paribas Asset Management (BNPP AM) has taken a significant step forward in digital asset management, issuing natively tokenized money market fund (MMF) shares on the Allfunds blockchain. This move promises to streamline cross-border transactions and expand access to a wider global investor base [1][2].
By issuing MMF shares as tokens directly on the Allfunds blockchain, BNPP AM capitalizes on blockchain’s distributed ledger technology to enable real-time transaction recording and settlement. This native digital share class also facilitates seamless transferability and easier compliance with regulatory requirements, enhancing investor confidence and market access beyond traditional distribution channels [1][2].
The architecture underpinning this solution, developed collaboratively with major financial institutions, leverages secure platforms for transaction recording and custody, promoting operational efficiency and security. This innovation aligns with broader trends in digital asset management where tokenisation creates liquidity, simplifies processes, and enables real-time data synchronisation across market participants [2].
The new shares were used in a cross-border transaction with a French counterparty, demonstrating the potential for faster settlement once the European Central Bank rolls out its wholesale DLT settlement solution [1][2]. BNPP AM acted as transfer agent and dealing services provider for the transaction, with Allfunds Blockchain serving as the technology partner [1].
BNPP AM is not new to blockchain technology. The firm has another blockchain solution, AssetFoundry, which is based on the public Ethereum network and resides within BNP Paribas CIB. Last year, BNP Paribas took part in the ECB's wholesale DLT trials [1].
The tokenization of MMFs is gaining attention for its potential to broaden distribution to a wider investor base and offer enhanced liquidity through direct trading and instant settlement. Other asset managers that have issued tokenized funds and their market capitalizations are mentioned below. BNPP AM's latest move is a significant step towards making tokenized MMFs a mainstream investment option [1].
In a statement, Paul Daly, Head of Distribution Products & Solutions, Securities Services, BNP Paribas, stated that the project provided valuable insights into the distinction between digital representation of a traditional fund share and a native token. Daly also suggested that BNPP AM is exploring the potential of tokenized MMFs for a broader investor base [1].
Recently, BNP Paribas Asset Management (BNPP AM) has also issued a sovereign bond by Slovenia using its private permissioned blockchain solution, the Neobonds platform. The Slovenian sovereign bond transaction involved a wholesale CBDC issued as part of the European Central Bank's (ECB) trial [1].
The Neobonds platform is based on Digital Asset's Canton, a blockchain-based platform for issuing, trading, and settling financial assets. This solution offers efficiencies and the ability to move away from batch subscription and redemption to on-demand transactions based on NAV valuations [1].
With significant interest around the potential of tokenized money market funds beyond traditional institutional investors to include crypto-native institutions and retail investors, BNPP AM's latest move could signal a shift towards a more inclusive and efficient investment landscape [1].
[1] BNPP AM Issues Tokenized Money Market Fund Shares on Allfunds Blockchain, Finextra, link
[2] BNP Paribas Asset Management Issues Tokenized Sovereign Bond Using Neobonds Platform, Finextra, link
- BNPP AM's issuance of natively tokenized money market fund shares on the Allfunds blockchain capitalizes on blockchain's technology to offer real-time transaction recording and settlement, enabling a wider global investor base and potential access to crypto-native institutions and retail investors.
- By leveraging technology like Digital Asset's Canton, BNPP AM's Neobonds platform demonstrates efficiencies in issuing and settling financial assets, such as a sovereign bond by Slovenia, paving the way for a broader investor base that includes institutions and retail investors.
- The tokenization of MMFs not only broadens distribution to a wider investor base but also offers enhanced liquidity through direct trading and instant settlement, streamlining cross-border transactions and aligning with broader trends in digital asset management for operational efficiency and security.
