Federated Hermes, a $911 billion Pittsburgh-based asset manager, plans to issue its first tokenized fund shares in early 2027, joining Wall Street’s growing push to bring traditional investments onto blockchain rails.
The initiative marks a shift toward direct in-house issuance. Federated Hermes previously worked with third-party platforms including Archax, Goldman Sachs, and Conduit Digital to tokenize existing investment products. This time, the firm will partner with Prometheum, a New York-based digital securities infrastructure provider, to distribute tokenized shares through traditional brokerage accounts.
Prometheum’s SEC-registered broker-dealer subsidiaries will handle custody, clearing, and settlement. The firm’s correspondent clearing platform will allow other broker-dealers to offer Federated Hermes’ tokenized products to their clients, expanding distribution beyond a single channel.
Money market funds are the likely starting point, given Federated Hermes’ substantial liquidity-management business. Kevin Barr, Director of Digital Asset Products and Platform at Federated Hermes, outlined the rationale: “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.”
Tokenized money market funds and U.S. Treasuries have spearheaded Wall Street’s tokenization efforts to date. BlackRock, Franklin Templeton, JPMorgan, and New York Life Insurance Company have all embraced tokenized fund offerings.
Infrastructure and Operational Efficiency
Barr emphasized the operational advantages of tokenization. “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,” he said.
Tokenized assets can serve as collateral for loans or trades, expanding their utility within financial workflows. Barr framed the move as a natural extension of Federated Hermes’ existing distribution model. “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,” he said.
Barr joined Federated Hermes in May after spending 15 years at BNY, where he most recently served as head of digital cash and innovation. His background in custody and digital asset infrastructure informed the partnership strategy with Prometheum.
Market Outlook
Barr characterized tokenization as foundational infrastructure evolution. “Tokenization represents, in a lot of ways, a fundamental upgrade to financial market infrastructure for this generation,” he said.
Citi projects the tokenized securities market will reach $5.5 trillion by 2030, signaling institutional confidence in the shift toward blockchain-based settlement and custody for traditional assets.
