Legal and General Tokenizes Liquidity Funds on Ethereum Network
Legal and General Asset Management has taken a step into the world of digital assets by tokenizing a selection of its liquidity funds on the Ethereum network. The move, announced on Wednesday, allows investors to access and settle fund shares through Calastone's blockchain distribution network, offering an alternative to traditional infrastructure.
The tokenized funds cover assets denominated in U.S. dollars, euros, and British pound sterling, collectively managing over £50 billion (around $67.9 billion). These funds are designed for capital preservation and provide same-day liquidity. They invest in short-term, high-quality instruments such as government bonds, bank deposits, and investment-grade corporate debt, catering to institutional investors seeking low-risk, liquid positions.
The tokenized share classes will initially be issued on Ethereum and other EVM-compatible networks, with access restricted to authorized participants. Standard share classes remain available through existing distribution channels. Calastone, part of SS&C Technologies, provides the infrastructure for this tokenized offering, handling token creation, order routing, settlement, and reconciliation. Its network connects over 4,500 financial institutions worldwide.
Legal and General Asset Management oversees approximately £1.2 trillion (about $1.63 trillion) in assets across public and private markets. The firm's entry into tokenized distribution aligns with a growing trend among large asset managers. Tokenized U.S. Treasury products, including money market funds, have surged to more than $13 billion, up from about $8.9 billion at the start of the year. BlackRock's BUIDL fund leads this category with roughly $2.47 billion in assets, followed by Franklin Templeton's OnChain US Government Money Fund and WisdomTree's Government Money Market Digital Fund.
The Bank for International Settlements has raised concerns about potential risks, warning that the gap between instant token transfers and slower settlement of underlying assets could create liquidity and contagion problems. U.K. regulators are also developing a formal framework, with the Financial Conduct Authority consulting on custody and trading rules ahead of a planned 2027 rollout.