Legal and General Tokenizes Liquidity Funds on Ethereum Network
Legal and General Asset Management has taken a significant step into the digital asset space by tokenizing a portion of its liquidity funds. The funds, which manage over £50 billion (around $67.9 billion) across U.S. dollars, euros, and British pound sterling, are now accessible through Calastone's blockchain distribution network. This move provides investors with an alternative to traditional infrastructure for accessing and settling fund shares.
The tokenized share classes will initially be issued on the Ethereum network and other EVM-compatible networks. Access to these digital shares is permissioned, meaning only authorized participants can buy, hold, or transfer them. Standard share classes remain available through existing distribution channels. The funds invest in short-term, high-quality instruments like government bonds, bank deposits, and investment-grade corporate debt, designed for institutional investors seeking low-risk, liquid positions.
Calastone, part of SS&C Technologies, built the infrastructure supporting the tokenized offering. Its network handles token creation, order routing, settlement, and reconciliation, connecting 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 broader trend among large asset managers. Tokenized U.S. Treasury products, including money market funds, have grown to more than $13 billion, up from about $8.9 billion at the start of the year. BlackRock's BUIDL fund leads the 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 in this area, warning that a gap between instant token transfers and slower settlement of underlying assets could create liquidity and contagion problems. U.K. regulators are also moving toward a formal framework, with the Financial Conduct Authority consulting on custody and trading rules ahead of a planned 2027 rollout.