Federated Hermes, a Pittsburgh-based investment manager overseeing $911 billion in assets, plans to issue its first tokenized fund shares in early 2027. The move positions the firm among major asset managers adopting blockchain technology for traditional investment products.
The asset manager has partnered with Prometheum, a New York-based digital securities infrastructure provider, to make the products available through traditional brokerages and financial advisers. Prometheum's SEC-registered broker-dealer subsidiaries will provide custody, clearing, and settlement services.
Money Market Funds as Starting Point
Federated Hermes has not yet disclosed which specific funds it plans to tokenize or which blockchains it will use. However, money market funds are a likely initial focus, according to Kevin Barr, the firm's director of digital asset products and platform.
"There's enormous interest in the industry at large around tokenized money market funds, [and] it aligns very well with the ballast of our franchise, which has been our liquidity funds," Barr said.
Money market funds invest in short-term debt and serve as a place for investors to park cash while earning yield. Tokenized versions could allow instantaneous movement of funds and enable programmability not easily available through traditional infrastructure.
Expanding Beyond Third-Party Tokenization
Federated Hermes has previously experimented with tokenization through partnerships with platforms including London-based Archax, Goldman Sachs, and Singapore-based Conduit Digital. Those arrangements involved third parties issuing digital versions of conventional fund holdings.
The new initiative marks a shift toward in-house issuance, giving Federated Hermes a more direct role in bringing its products onchain. Barr, who joined Federated Hermes in May after 15 years at BNY Mellon where he served as head of digital cash and innovation, emphasized that access has been a primary barrier to adoption.
"For us, it becomes a natural extension of how we distribute our products today, and it just makes all the sense of the world from that perspective," Barr said.
Industry Momentum
Federated Hermes joins other major asset managers adopting tokenization, including BlackRock, Franklin Templeton, JPMorgan, and New York Life Insurance Company. Citi has projected that the tokenized securities market could reach $5.5 trillion by 2030.
