By Mark McSherry
Edinburgh-based investment giant Abrdn announced that Archax, the FCA regulated digital asset exchange, has created a tokenised representation of its interests in Abrdn’s £16 billion flagship money market fund — the Aberdeen Standard Liquidity Fund (Lux) – Sterling Fund.
Abrdn called the move “a key milestone” in its developing digital assets strategy.
“Archax’s tokens leverage the Hedera Hashgraph distributed ledger technology (DLT) of which Abrdn is a governing council member,” said Abrdn.
“It also builds on the investment Abrdn made into Archax last year and represents the first step towards a number of tokenisation projects that the parties are collaborating on.
“Specifically, Abrdn is working towards creating a tokenised strategy where digital tokens can be transferred, held and managed on chain.
“In time, Abrdn will look to use this model across a range of its investment capabilities in particular in private markets where the ability to fractionalise holdings and provide additional liquidity are particularly attractive.”
Last November, Abrdn said it led a $28.5 million Series A funding round into Archax, the UK’s first regulated digital securities exchange.
Last August, Abrdn said it concluded a deal to become the largest external shareholder in Archax.
Abrdn said Archax has been set up to provide access for institutional investors to blockchain-based digital assets “acting as a bridge to traditional capital markets.”
Abrdn manages and administers £500 billion of assets. Its investments business manages about £380 billion on behalf of clients — including insurance companies, sovereign wealth funds, independent wealth managers, pension funds, platforms, banks and family offices.
Global Head of Alternatives at Abrdn, Russell Barlow, said: “The focus of our Digital Asset strategy is on the developing, and long-term, opportunity we foresee as blockchain and other DLTs comes to play a central role in how markets function.
“Our investment in Archax is a key part of this strategy because we believe that the future of financial markets lies with leveraging new technologies, such as Web 3.0 and DLT.
“It is exciting to see a tangible application of Archax’s tokenisation engine working with Hedera and it paves the way for us to look at creating other digital, blockchain-based token investment solutions.”
Archax CEO and co-founder of Archax Graham Rodford said: “Creating a token representation of our interest in such a traditional and institutional-grade vehicle opens up all sorts of interesting opportunities in the digital asset space.
“We are exploring other applications with abrdn to improve access to investment products in this space in the near future.”
Abrdn CEO Stephen Bird said: “Today marks further progress for Abrdn’s digital asset strategy.
“The potential for assets to be traded via blockchain is significant and this is another step in putting Abrdn at the forefront of this new offering.
“And it won’t just be good for us – these huge technological shifts have the power to deliver benefits for all our stakeholders.”
Abrdn said that globally “over $500 trillion in equities, bonds, real estate and private markets could potentially be brought on-chain within the next 10 years” and this would “clearly represent a seismic shift.”
Abrdn said this would facilitate “the democratisation of finance” through “fractionalisation of private market investments usually reserved for institutional investors now being made available to individuals.”