The firm writes that shares in the fund will be issued using Franklin’s proprietary blockchain-enabled transfer agency platform, giving investors the benefit of the transparency, security, accuracy and immediacy made possible by blockchain technology.

The fund, which is scheduled for launch over the next few months, will be the first tokenised UCITS fund on a public blockchain using in house capabilities and technologies in Luxembourg, and is expected to be distributed widely throughout Europe pending regulatory approval, the firm writes. Further details will be available to investors in due course. 

Franklin Templeton’s Sandy Kaul, Head of Digital Assets and Industry Advisory Services, says: “We want to be known as a leader in developing innovative solutions that align with the needs of our clients’ in terms of business growth, operational efficiency, and scalable best practices.  Disruptive technology and innovation in financial services is reshaping the industry and changing the fundamental rules for how to attract, secure, and serve clients.  We believe that in the future, there may be opportunities to create other tokenised financial products, including interoperability with other digital assets and blockchain native facilities.  We are committed to continuing to explore these opportunities as part of our broader digital assets strategy.”

The expansion of this new capability signals Franklin Templeton’s confidence and belief in Web3 and digital technologies which have the potential to reshape the asset management industry by creating new opportunities to more closely link traditional asset management products and services to transactional payments.  Over the last four years, the firm has developed the resources, reach and expertise to support innovative solutions from beginning to end, including regulatory, custody, digital wallet creation, and the legal and risk management structures required for long-term success.

In April 2021, Franklin Templeton launched the Franklin OnChain U.S. Government Money Fund2, the first US-registered mutual fund to use a public blockchain to process transactions and record share ownership.

Roger Bayston, EVP, Head of Digital Assets, Franklin Templeton, says: “We have been active participants and builders in the digital asset ecosystem since 2018 and have seen the transformative power of blockchain technology firsthand.  As technological innovation continues at pace, we continue to work closely with regulators around the world to introduce innovative solutions to the marketplace. Leveraging our in-depth knowledge of blockchain ecosystems and proprietary technologies, we are well positioned to introduce products that serve to further the understanding and accessibility of digital assets within the broader community.”

The firm writes that blockchain is a decentralised digital ledger that records and verifies transactions in a secure, transparent, and immutable way. It enables peer-to-peer transactions without the need for intermediaries, ensuring that all data is permanently recorded and visible to everyone.  While traditional databases can be vulnerable to security breaches, blockchain provides improved security and a reduction in administrative burden.

The benefits of asset tokenisation include increased liquidity, accessibility, composability and transparency, the firm says. By applying the benefits of blockchain technology to a traditional product, investors will benefit from efficient transfer and cost-effective administration.

Matt Harrison, Head of Americas (ex-US), Europe & UK at Franklin Templeton, says: “This new fund will mark a pivotal step in our global commitment to leverage blockchain technology for clients beyond the US.  We continuously focus on innovation and long-term value creation for our clients, and we want to equip them with tools, services and knowledge to make informed decisions.  With our proprietary solutions, we offer enhanced security, transparency, and efficiency, further solidifying our leadership in the rapidly evolving digital asset space.”

Bruce Jackson is Chief of Digital assets Funds and Business at Apex, and a board member of Issuance.Swiss AG, a new foundation structure designed to enable asset managers to sell cryptocurrency strategies into their clients’ conventional accounts, from an arm’s length entity. 

Of Apex’s USD3 trillion in AUA, USD2 trillion is in relatively illiquid alternative strategies, with the remainder in open ended funds and SPV holding structures for institutions and large investors.  Jackson says that the firm’s digital team is leading the industry in tokenising these conventional fund products for their clients. 

“We enable our clients to put conventional fund products into digital accounts, by creating a digital share class, and a blockchain-based registry,” he says.

This month, the Luxembourg regulatory regime has given approval for Sygnum Bank, Hamilton Lane and Apex to create this structure, offering a digital share class of the Hamilton Lane GPA Fund for subscription, directly into a Sygnum Bank crypto account.

“We will administer this using the blockchain as the book of record,” Jackson adds.

“Normally, investing with Hamilton Lane requires a minimum USD5 million subscription, confining availability to institutional investors and large family offices. This digital share class enables a much wider group of investors to invest as little as USD1,000 with Hamilton Lane.  We could have created a feeder fund, but that would add cost and illiquidity. Hamilton Lane wished to deliver their industry-leading alpha directly into their client’s accounts, large and small.” 

“We are again creating an automated platform, offering a new channel for AUM growth for our clients, delivering their alternative strategies into crypto accounts.”

Headquartered in Bermuda, Jackson says that the sector needed an automated platform to enable asset managers to sell more product and a wider variety of fund strategies, with an accelerated time to market, and a low turnkey cost.   This they have built, he says, within the Issuance.Swiss AG platform, working with Xetra on the Deutsche Borse and the SIX Exchange. 

Jackson explains that he and his colleague on the Issuance board, Laurent Kssis of CEC Capital, made a call late last year that fees were going to compress for Digital Exchange Traded Funds and Products. “We correctly predicted that when the SEC approved the spot bitcoin ETFs, fee compression would be an instant race to zero,” he says.

“In addition to managing costs and time-to-market, it is critical to structure these funds correctly.   As the issuer/manager of an ETP or ETF, the asset manager must consolidate the invested assets on their balance sheet, which can be a challenge for some organisations, when it comes to crypto assets.  Apex Group transfers this role to Issuance.Swiss, enabling asset managers and distributors to sell crypto strategies to their clients without the impacts of consolidation,” Jackson explains.

“Our client manages the product. Our distributor sells it, and neither of these entities has to consolidate the crypto assets on their balance sheet.”

March will see three large launches on the platform, with Figment offering two staking funds, for Ethereum and Solana, and Cardano launching an Ethereum strategy featuring downside protection using derivatives.

Issuance.Swiss AG previously worked with the Crypto Finance Asset Management, a subsidiary of Deutsche Borse, with their fund launches.   

Jackson adds that what Apex brings to the offering is the depth and breadth of its corporate and administration services. “We can do this quickly, in six weeks, and inexpensively,” he says. “We have negotiated a series of relationships, and compressed the fee structure, so that our clients, the asset managers, and distributors, could issue a new fund with as little as USD10 million AUM, and still make money. We structured this to enable testing a new market idea and remain in the black.”

“We knew we could compete with US entities pushing passive ETFs, as our clients tend to focus on specific managed strategies, for specific client segments.”

Issuance.Swiss plans another 15 new issues, over the course of the next two to three months. 

If there is another crypto winter, Jackson believes that while the demand will change, there will be no shortage of managers who can create product that protects in down markets.

The platform, Ubermorgen, is designed to give financial market participants instant access to funds through the automated issuance of commercial paper and certificates of deposit, highlighting the potential of blockchain technology for real-time settlement and enhanced real-time money market analytics.

The pre-production pilot programme, which is an industry-driven joint initiative, also underscores the adaptability and interoperability of blockchain in traditional financial instruments, connected to multiple legacy infrastructures. In addition, Ubermorgen showcases the power of real-time settlement, providing an unprecedented level of efficiency and transparency in the issuance and trading processes. This advancement promises to revolutionise the current settlement landscape and intra-day liquidity management.

In the recent trial-run, Rabobank Markets and Ubermorgen collaborated with Rabobank Treasury, TreasurySpring and two large asset managers, executing multiple commercial paper and time deposits in EUR, USD and GBP with a total notional of over EUR2 billion. Their active participation and endorsement signify the industry-wide recognition of the potential benefits of blockchain in the money markets, the firm writes.

The pilot also integrated cutting-edge analytics tools, providing market participants with real-time insights into money market trends. This data-driven approach enhances decision-making capabilities for treasurers, dealers and asset managers, offering a competitive edge in navigating the dynamic financial landscape.

Youssef el Mir, Global Head of Trading at Rabobank, says: “We are proud to have achieved this milestone in collaboration with esteemed global asset managers. This successful pilot demonstrates the transformative potential of blockchain in enhancing efficiency, transparency, and analytics in the financial sector.”

Steve Patrick, Chief Operating Officer at Ubermorgen, adds: “Ensuring smooth interoperability between Distributed Ledger Technology (DLT) and established financial infrastructures is vital for a seamless shift toward the widespread adoption of DLT platforms in the market. We are delighted to collaborate closely with industry leaders in the financial markets to contribute to establishing the Ubermorgen real-time markets and A.I driven analytics platform as an industry-standard solution.”

Henry Adams, Chief Product Officer at TreasurySpring, says: “We are delighted to have worked with the high-calibre teams at Ubermorgen and Rabobank participating in this, the second round of pilots. The move to T0 and instantaneous settlement represents a significant milestone in the development of capital markets along with reducing credit risk in the financial system. TreasurySpring looks forward to now going live and contributing to the broader adoption of these technologies. There is immediate value in particular to several regulated sectors within our client base where day count is critical that we look forward to capturing on their behalf.”

Jacek Wieclawski, Head of Innovation at Rabobank, says: “The hybrid approach, global and instant interoperability is the future of finance. Our clients have shared their enthusiasm about this new solution, which blends the best of both worlds – the speed and flexibility of a distributed ledger technology and the reliability and compliance of a centralised system.”

The firm writes that it is recognised globally as a top non-custodial staking provider for Ethereum, and that its emphasis on Switzerland aligns with the nation’s adoption of digital assets and commitment to advancing financial innovation. 

The firm writes that this commitment builds on Figment’s establishment of Figment Europe Ltd, its UK-based entity, showcasing the company’s dedication to cater to the diverse needs of institutional clients across key European markets.

Figment writes that, with Switzerland being the home of the two largest Proof-of-Stake protocols, Ethereum and Solana, and its recognition as the epicenter of crypto innovation in the Crypto Valley, it is set to form strategic partnerships and actively contribute to the local blockchain community. 

Figment specialises in providing staking services for a diverse range of leading Proof-of-Stake networks, leveraging its engineering and protocol expertise to enhance clients’ opportunities for earning staking rewards. Since 2018, Figment writes that it has responsibly staked over CHF10 billion across more than 30 established and emerging networks including Ethereum, Solana, Polygon, Polkadot, Celestia, and Sui.

Figment writes that, in collaboration with a major partner in the Swiss region, it will unveil another significant milestone in the coming weeks.

Eva Lawrence, Head of Figment Europe and Co-Lead of Crypto Valley Association’s Institutional Working Group, says: “Our expansion into Switzerland signifies a deepening commitment to the European institutional crypto ecosystem. We look forward to continuing to foster collaborations and contributing to the vibrant blockchain landscape in the region.”

Josh Deems, Institutional Business Development Lead for Figment, says: “This move sets the stage for Figment to bring Swiss institutional investors a tailored staking experience that aligns with the needs of the modern crypto investor. To date, we have begun establishing partnerships with Swiss firms, including investors in our company along with large staking customers. This next phase is a major step as we aim to scale our presence in the region.”

The Altana Digital Assets Fund (ADAF) invests in early-stage blockchain projects that are largely inaccessible through traditional equity investments, with the aim of allowing investors to participate in what the firm describes as “the significant upside potential of an asset class that is poised to explode”.

Altana, a multi-strategy asset management operation which Robinson – a former Tudor portfolio manager and the co-founder of Trafalgar Asset Managers – founded in 2010, is one of the pioneers in crypto investing.

The firm’s Altana Digital Currency Fund (ADCF), the first active cryptocurrency fund in Europe when it started trading back in May 2014, has returned 7,000 per cent net of fees to date – including a return of 1,495 per cent in 2014.

ADCF invests in major cryptocurrencies in proportion to their global market capitalisation and since inception has outperformed the Bloomberg Galaxy Crypto Index by more than 1,000 per cent per cent.

In January 2017 it launched Altana Specialty Finance (ASF), a specialist financing strategy that loans US dollars to crypto traders secured on their underlying crypto assets. The firm says ASF has never had a down month in the more than five years that it has been running – generating gross annualised returns of 19 per cent, with zero impairment on its loans.

The new ADAF fund uses a discretionary portfolio management strategy following a venture capital style rules-based investment process to source, research, and filter the highest-quality digital assets. According to the firm, it follows six main investment themes: layer 1 and 2 blockchain, decentralised finance, Web 3.0, centralised exchange platforms, interoperability, and metaverse/gaming.

Says portfolio manager Samed Bouaynaya: “With the current market sell-off and investor sentiment at extreme fear levels, we believe we have an extraordinary opportunity to launch the fund now and start averaging into our best blue-chip projects.”

He adds: “We have been closely monitoring key players’ liquidity positions following the recent market sell-off and work alongside Altana’s macro portfolio managers to monitor central bank policy actions. We believe both factors will soon signal a sentiment reversal. As we remain firm believers in the long-term disruptive potential of blockchain technology, these are exciting times for us.”

Altana founder Robinson says: “We recognised the opportunities for a new and truly decentralised asset class back in 2014 when bitcoin was trading at USD435. Since then, Altana has been a leader in crypto markets that are constantly changing and innovating.”

“ADAF will give our investors the opportunity to invest alongside us in game-changing blockchain technologies that have the potential to generate asymmetric returns. I am excited to be able to participate in VC-type returns yet have the ability to reallocate in real time.”

Since its establishment in 2010, Altana Wealth has grown to manage more than USD500 million in assets and employs over 30 personnel across its London and Monaco offices. The firm focuses on delivering alpha from niche strategies, with low correlation to other asset classes and broader markets, and where the firm believes it has an information or structural advantage to generate real returns above inflation.

These strategies include funds offering exposure to cryptocurrencies, focused equity, niche fixed income, FX, social impact, and carbon markets. According to the firm, over the past 20 years Robinson has made more than USD1 billion for investors through these strategies.

PORTL provides a robust and permissioned toolset for financial institutions to build applications that interoperate between existing infrastructures and a range of enterprise ledger technologies including Corda, Besu, Fabric, DAML and SETL’s own high-performance ledger.

The adoption of DLT in financial services has been slow in spite of the tremendous potential the technology has to offer. Many of the reasons lead back to a lack of understanding of secure deployment procedures for banks, where the high levels of IT security that banks expect stands in contrast to the innovation-first approach taken by some blockchain frameworks. In addition, low speed, limited scalability and a lack of a strategy for Integration with existing systems has led to unsuccessful proof-of-concepts (POCs). What’s more, to go from POC to a live system, banks need to plan for high volume and massive scale. Any blockchain needs to work within the array of systems that banks currently deploy, including links to SWIFT, hardware security modules and enterprise identity systems, to name but a few.

Philippe Morel, SETL CEO, says: “The potential of DLT solutions is still significantly underexploited. With our open-source and fully interoperable PORTL framework, we hope to contribute to a wider adoption of DLT-based solutions.”

Anthony Culligan, Chief Engineer, adds: “We are proud to make PORTL widely available to the tech community. It covers critical components for wide adoption of DLT standards, such as a tokenisation engine, smart contract, workflow and settlement engines, running on our DLT which is one of the fastest and most scalable in the world.”

In announcing PORTL, SETL is seeking to give institutions the tools they need to take DLT and blockchain into production.  The PORTL framework includes a normalising layer for a range of enterprise ledgers, a BPMN2 workflow environment based on the opensource Camunda engine and ISO15022/ISO20022 integration with SWIFT. All of the components are deployable into a secure bank environment. To ease integration with existing systems, SETL has adopted KAFKA, the open source, high volume event engine as its main backbone for inter-process communication.  

Culligan adds: “Our use of high capacity and battle-hardened components such as Kafka and Camunda is in line with the technology journey financial institutions are taking. PORTL bridges the gap between ledger innovation and business integration allowing the true benefits of DLT to make the jump from POC to live operation.”

A finalist of the Monetary Authority of Singapore (MAS) CBDC challenge, SETL was also recently selected as one of Marketnode’s key technology partners. Marketnode is an SGX and Temasek digital asset venture specialising in developing DLT-based solutions for the financial industry. Its solutions are used in large-scale environments such as Citi.

Rehan Ahmed, Chief Product Officer at Marketnode, says: “We are proud to partner with SETL and share the same vision of a DLT enabled financial ecosystem alongside the paradigm shifts these innovations can enable. Marketnode is looking forward to leveraging SETL’s open-source technology to build out our next-generation end-to-end financial market infrastructure”.

Joerg Guenther, Global Head of Technology for Citi Securities Services, says: “We have been working with SETL for several years and are in the process of deploying their solutions within our Securities Services business. We believe that DLT could be transformational for our industry and SETL’s strategy to open source its technology and ensure interoperability is a positive step to enabling scalability of DLT use cases”.

The Cion Digital Blockchain Orchestration Platform is engineered to speed integration, provide optionality, prevent technical debt from the get-go and remove friction from creating blockchain-based innovative real-time payment and financing. The path-breaking orchestration platform facilitates real-time money movement using blockchain technology. It offers both ready-to-use solutions and rapid integration to leading crypto exchanges, cutting edge DeFi protocols and aggregator services that create a bridge from DeFi to TradFi. 
 
“We wanted to create a simpler way for institutions to quickly and seamlessly connect with the complex and ever-changing world of decentralised finance,” says Cion Digital’s CEO & Founder Snehal Fulzele. “We brought together very senior FinTech leaders who’ve helped banks, payments and lending institutions adapt and evolve as digital and cloud have transformed finance systems. Our leaders understand payments, banking and lending incredibly well, and know institutions need solutions that quickly evolve their existing financial systems for the new digital economy and prevent them from being disrupted.”
 
Fulzele is well known in FinTech, most recently as CEO & Co-Founder of Cloud Lending Solutions, which he led from inception to its acquisition by Q2 Holdings, and as Senior Vice President and GM Cloud Lending at Q2.
 
Cion Digital’s co-founder, Fred Brothers, is a 25 year FinTech executive with roles including EVP & Chief Innovation Officer at FIS, EVP & Chief Strategy Officer at FIS, VP eCommerce Strategy at CheckFree (now Fiserv) and a Cardlytics board member.

Other Cion Digital executives include Chief Marketing Officer Katie Robinson (Alliance Data, FIS), EVP Engineering & GM India Arpit Agrawal (Blockchain Simplified), EVP & GM APAC Chris Boas (Q2/Cloud Lending, Misys) and EVP & Head of US Sales Jim Donatell (Q2/Cloud Lending, JPMorgan Chase).

The addition of UBS builds on the early platform success and accelerates the expansion of the DLR network, leveraging Broadridge’s fixed income platform that processes over USD6 trillion in average daily volume and includes 20 of the 24 primary dealers.  

“We look forward to the enhanced liquidity and reduction of risk that Broadridge’s distributed ledger repo platform provides,” says Paul Chiappetta, Americas Chief Operating Officer of Group Treasury at UBS AG. “This partnership reinforces our overall digital strategy, leveraging new technologies aimed at reducing risk and improving efficiencies in the financial markets.” 

DLR provides a single platform where market participants can agree, execute and settle repo transactions. Under a digital repo approach, collateral can be detached from the trade agreement, while the cash remains off-chain. Furthermore, DLR allows for the immobilisation of the underlying securities in the repo transactions, while transferring ownership via smart contracts executed on the platform. The platform’s functionality significantly reduces the operating cost and risk of all repo activity, including intraday, overnight and term repos, both on a bilateral and intracompany basis and reduces counterparty risk while increasing auditability.

“In the first weeks since launch, DLR has executed USD35 billion in average daily volume – a testament to the success of the platform, which we expect to continue to grow as additional clients join the platform,” said Vijay Mayadas, President of Capital Markets at Broadridge. “We are excited to welcome UBS onto the platform and to continue to bring significant benefits in the form of enhanced liquidity, reduction of risk and operational efficiencies to our clients and the industry.”

The paper takes on the thesis that tokenisation provides a path to a more generic way of owning and trading regulated liabilities, such as shares and bonds; maps the details of how this might work; and offers practical steps to bring together regulated DLT and unregulated public blockchains.

SETL proposes that regulators step into the public blockchain space and require miners to be responsible for changes they propose to the ledger.  Anthony Culligan, Chief Engineer and co-author of the paper, notes: “It’s time we opened up this sector to innovation from the regulated financial services sector.  This can only happen by ensuring that all transactions on public chains meet the same standards as account-based transactions. Existing mining pools are run by a small number of companies that need to choose a regulated or unregulated future.  There is nothing in the original idea of public blockchains that promotes or recommends the current regime so let’s be proactive and put proper public interest at the heart of public blockchains.”

SETL’s paper, ‘Realising the Regulated Internet of Value’,  follows a paper by Tony McLaughlin, Emerging Payments & Business Development, Treasury & Trade Solutions, at Citi, entitled ‘The Regulated Internet of Value’, which addresses the path to reconciling the traditional account-based economy with the emerging world of tokens. 

SETL proposes that the benefit of tokenisation is that it creates a direct association between the holder and its issuer and alleviates the need for multiple intermediary ledgers. It also creates a unified approach to interact with all types of assets and liabilities.  Tokenisation is the construct and DLT is the mechanism to provide the technological foundation to operate a resilient, ubiquitous, programmable network which supports multiple assets and regulated liabilities on a common platform (CBDC, Commercial Bank Money, E-Money, Stable coins & Assets).

SETL’s paper catalogues the challenges that need to be met to bring about a regulated internet of value based on tokenisation. Those include regulation, standards and interoperability.  Forming a common understanding between regulators, central banks and the private sector on oversight, protection and stability is key. At the same time, creating open standards enhances competition, while technical interoperability and a deep understanding of the complex mechanics of regulated financial markets will be core.

The analysis details how tokenisation could leverage the considerable work that has gone into making thousands of banks and financial companies operate in today’s world while benefiting from the new technology that is emerging in the blockchain and DLT fields.

Anthony Culligan , Chief Engineer, SETL, says: “It would be a mistake for blockchain technologies to try to reinvent the wheel.  As this technology matures and becomes part of global finance it needs to be fit for purpose and interoperable with a range of protocols, standards and ledger systems that exist already.”

Marjan Delatinne, Managing Director Payments, SETL, says: “The collaboration between public and private sectors will lay the foundation for the success of this vision. The support of international oversights in establishing a synergetic relationship between parties is playing a crucial role. We commenced this journey and are looking to engage further in building consensus on the delivery of the Regulated Liability Network.”

Philippe Morel, Chief Executive Officer, SETL, says: “At SETL, we are firm believers in the potential of tokenisation. After being the first DLT firm to deliver live market infrastructures, we are in the process of delivering live tokenisation engines to our clients – maintaining our leading-edge position in the DLT space. We are proud of our super-efficient private DLT and the ability to develop on major Public DLT, according to our clients’ needs. We believe that both Private and (better regulated) Public DLTs have a role to play in tokenising financial assets and liabilities”.

Provenance is a decentralised, open source, proof of stake blockchain designed specifically for real world financial applications such as home lending, banking, payments, fund management, and equity management and trading. Bison Trails is supporting Provenance by providing secure validator infrastructure for those interested in participating in the network, and supporting the growth, security, and adoption of the chain. Bison Trails has deep expertise in the Tendermint ecosystem, supporting multiple Tendermint-based chains including Cosmos, Terra, Oasis, and Crypto.org.

“We’re excited to collaborate with Bison Trails, a leader in blockchain infrastructure, to provide infrastructure to Hash holders to run validator nodes on the network,” says June Ou, Executive Director at Provenance Blockchain Foundation.

“We’re proud to support Provenance in its mission to transform the financial services industry for the better,” says Joe Lallouz, CEO of Bison Trails. “The launch of Provenance to a public Tendermint blockchain opens the door for the growing adoption and new applications of blockchain technology in financial services. With our secure, reliable infrastructure, and strong experience with the Tendermint ecosystem, we make it easy for Hash holders to participate in this innovative new network.” 

Participants stake Hash, the native token, to run a node on Provenance. Hash is both the means of payment for transactions as well as a method of governance of the blockchain, meaning the many numerous financial marketplaces leveraging Provenance hold Hash in order to interact on the blockchain. 

Provenance is a blockchain built to facilitate marketplaces and exchanges for buyers and sellers of digital assets. It reduces third-party intermediation and internal staffing costs while promoting greater transparency and liquidity, allowing for new kinds of financial engineering and business opportunities.