Legal & General (L&G), a well-known pension and investment management firm based in London with assets worth $1.5 trillion, is considering entering the world of blockchain-based tokenization, a trend that is gaining popularity among major financial institutions. Tokenization involves representing traditional assets, such as U.S. Treasuries-backed money-market funds, using tokens on a blockchain. This approach has become increasingly popular among traditional finance companies, especially after BlackRock, the world’s largest asset manager, introduced its BUIDL fund on the Ethereum blockchain. Other companies like Franklin Templeton, State Street, and Abrdn have also joined the trend.
Ed Wicks, the global head of trading at Legal & General Investment Management (LGIM), mentioned in an email that they are exploring ways to offer the Legal & General Investment Management Liquidity funds in a tokenized format. According to Wicks, digitizing the funds industry is essential for enhancing efficiency, reducing costs, and expanding the range of investment options available to a broader group of investors. He expressed optimism about the advancements in this space.
Legal & General’s interest in blockchain technology dates back to 2019 when the company announced plans to utilize Amazon Web Services’ managed blockchain system to manage and record bulk annuities for its insurance business. LGIM, the asset management division of Legal & General, is actively exploring the potential of blockchain technology and its applications in the financial sector.
It is worth noting that CoinDesk, the media outlet that reported on L&G’s exploration of the crypto tokenization sector, is dedicated to covering the cryptocurrency industry. The journalists at CoinDesk adhere to strict editorial policies to ensure integrity, editorial independence, and freedom from bias in their publications. CoinDesk is part of the Bullish group, which invests in digital asset businesses, and its employees, including journalists, may receive equity-based compensation from Bullish. Bullish was founded by technology investor Block.one.
In conclusion, Legal & General’s potential entry into the crypto tokenization sector highlights the growing interest of traditional financial institutions in blockchain technology. As more companies explore the possibilities offered by tokenization, the financial industry is poised for significant transformations in the way assets are managed and traded. It will be interesting to see how Legal & General’s foray into this space unfolds and contributes to the broader adoption of blockchain technology in the financial sector.