Federated Hermes Plans First Tokenized Fund Shares in Early 2027
$911 billion asset manager plans first tokenized fund shares
Federated Hermes, the Pittsburgh-based investment manager overseeing $911 billion in assets, plans to issue its first tokenized fund share classes in early 2027. The company has partnered with New York-based digital securities firm Prometheum to bring the products to traditional brokerage accounts.
Tokenization means turning ownership of a financial asset into a digital record on a blockchain, a shared digital ledger that tracks transactions. This allows investment shares to be issued, transferred, and settled digitally.
The firm has not yet revealed which specific funds it will tokenize or which blockchains it will use, according to Kevin Barr, the company's director of digital asset products and platform.
Key details from the announcement
- Federated Hermes manages $911 billion in assets and is headquartered in Pittsburgh.
- First tokenized fund share classes are planned for early 2027.
- Prometheum will provide custody, clearing, and settlement services through its SEC-registered broker-dealer subsidiaries.
- Money market funds are the likely starting point, per Barr.
- The company intends to issue tokenized shares itself, rather than through third parties.
What the company's digital asset lead said
Kevin Barr, who has led digital asset products at Federated Hermes since joining in May, said the firm's large liquidity-management business makes money market funds a natural fit. These funds invest in short-term debt and let investors earn a return while keeping cash accessible.
"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 told CoinDesk.
Barr also highlighted a practical advantage of the technology: "You can have instantaneous movement of those funds. You can have programmability of those funds in a way that is perhaps more difficult or operationally inefficient with traditional infrastructure."
Before joining Federated Hermes, Barr spent 15 years at BNY, a major custody bank, most recently as head of digital cash and innovation.
How this differs from earlier tokenization efforts
Federated Hermes has worked on blockchain-based products before. The firm partnered with platforms including Archax (London), Goldman Sachs, and Conduit Digital (Singapore) to create digital versions of its existing investment products. In those earlier arrangements, third parties issued the tokens.
With the upcoming tokenized share classes, the company plans to issue the tokens directly itself, giving it a more hands-on role in bringing products on-chain.
How brokerage access will work
Prometheum's SEC-registered broker-dealer subsidiaries will handle custody, clearing, and settlement. Its correspondent clearing platform will let other broker-dealers offer Federated Hermes' tokenized products to their own clients.
Barr said a major barrier to wider adoption has been access, not the underlying blockchain technology. Financial advisers need ways to offer tokenized funds without rebuilding their existing systems.
"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.
What is still unclear
Which specific funds Federated Hermes will tokenize and which blockchains they will run on have not been disclosed.
Why this matters for Wall Street tokenization
The move adds another major asset manager to a growing group on Wall Street exploring blockchain-based fund products. Firms including BlackRock, Franklin Templeton, JPMorgan, and New York Life Insurance Company have embraced blockchain-based versions of traditional funds, betting the technology can modernize how assets are issued, transferred, and settled.
Proponents argue that using blockchains for investment funds could speed up settlement times, automate recordkeeping, and make assets easier to move between financial platforms. Citi has projected the tokenized securities market could reach $5.5 trillion by 2030.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.
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