Legal & General (L&G), a prominent London-based pension and investment company with around $1.5 trillion in assets, has declared its intention to join the rapidly growing trend of cryptocurrency tokenisation. This decision brings L&G in line with several other large financial companies, including BlackRock and Franklin Templeton, which have already embarked on the process of active asset tokenisation.
Tokenisation transforms traditional financial securities, such as U.S. Treasury-backed money market funds, into tokens on blockchain systems. This has surprisingly attracted the interest of traditional finance participants, especially after BlackRock launched its BUIDL fund on the Ethereum network. The increasing attention towards tokenisation is associated with digitisation that has swept across financial services, with the plan of improving performance and access.
According to Ed Wicks, the current global trading head at Legal & General Investment Management (LGIM), the company is actively considering offering its liquidity funds in a Tokenized format. He encouraged the fund's industry to embrace digitization to enhance the efficiency of its operations and expenses. Wicks pointed out that the tokenization concept could provide a varied portfolio of investment opportunities to other classes of investors, thus expanding financial products' accessibility.
L&G's involvement in blockchain technology can be traced back to early 2019 when the company launched plans to adopt Amazon Web Services (AWS) for its managed blockchain system. This system helps the company keep and track bulk annuities and is one way London & General implements technologies.
This year, BlackRock's joining the crypto tokenisation ecosystem through its BUIDL fund was a major addition to the financial industry. The fund invests mainly in cash, debt securities, and notes of the United States Treasury using the proficiency of the Ethereum blockchain network. Other financial institutions have also moved to emulate this by another world's largest asset manager.
Other firms, such as Franklin Templeton and State Street, have also started tokenisation initiatives to address this trend. Smart contract functionalities have allowed BUIDL holders to trade their shares for USDC stablecoins, adding more value to tokenised assets. This development underscores the growing collaboration between traditional finance and blockchain technology, fostering innovation and new investment strategies.
In a recent strategic move, BlackRock partnered with brokerage firm Securitize to facilitate using its BUIDL token on leading derivatives platforms such as Binance, OKX, and Deribit. This collaboration aims to expand the BUIDL token's market utility and solidify BlackRock's position within the evolving landscape of digital assets.