Legal & General (L&G), a prominent UK-based pension and investment management firm overseeing $1.5 trillion in assets, is preparing to enter the growing world of blockchain-based tokenization, following the footsteps of other traditional finance leaders like BlackRock, Franklin Templeton, and Abrdn.
Tokenization Trend Gains Momentum
Tokenization refers to the process of representing traditional assets such as money-market funds backed by U.S. Treasuries via blockchain-based tokens. The financial industry has increasingly embraced tokenization for its potential to improve efficiency, reduce costs, and expand access to new investor groups.
BlackRock’s BUIDL fund on the Ethereum blockchain is one prominent example, and other global financial institutions such as State Street and Franklin Templeton have launched tokenized financial products.
L&G’s Vision for Tokenization
L&G’s asset management arm, Legal & General Investment Management (LGIM), is currently evaluating how it can make its liquidity funds available in tokenized form.
“Digitization of the funds industry is key to improving efficiency, reducing costs, and providing a broader range of investment solutions,” said Ed Wicks, global head of trading at LGIM. “We look forward to continued progress in this space.”
L&G’s interest in blockchain technology isn’t new. Back in 2019, the firm announced plans to use Amazon Web Services (AWS) blockchain infrastructure to manage and record bulk annuities for its insurance operations.
L&G Joins a Growing Market
The move signals growing acceptance of tokenization among traditional finance players. By exploring blockchain technology, L&G aims to capitalize on digital transformation trends within the asset management industry, making its offerings more accessible and efficient.
As the demand for blockchain-based financial products continues to rise, firms like L&G see an opportunity to provide investors with enhanced solutions that leverage the transparency, security, and accessibility of distributed ledger technology.
With industry giants like BlackRock leading the charge, L&G’s potential foray into tokenization reflects an expanding trend in traditional finance embracing blockchain to unlock new opportunities in asset management.
