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Federated Hermes to Launch Onchain Fund Shares in Tokenization Push

The $911 billion asset manager partners with Prometheum to bring blockchain-based share classes to traditional brokerage accounts

By LineZotpaper
Published
Read Time2 min
Federated Hermes, the Pittsburgh-based asset manager with $911 billion in assets, is teaming up with digital securities firm Prometheum to create blockchain-based share classes of its funds, marking one of the largest traditional asset managers to move into onchain fund distribution. The initiative would allow investors to hold tokenized fund shares through conventional brokerage accounts, bridging the gap between digital assets and mainstream finance.

The partnership represents a significant step in Wall Street's growing embrace of tokenization, the process of issuing traditional financial instruments as digital tokens on a blockchain. Federated Hermes plans to offer what it describes as the first onchain share classes of its funds, distributed through Prometheum's platform.

Tokenization of fund shares has been gaining traction among institutional investors seeking the efficiency, transparency and programmability of blockchain-based settlements while retaining exposure to conventional asset classes. Prometheum, which operates a special-purpose broker-dealer registered with the U.S. Securities and Exchange Commission, provides a regulated framework for digital asset securities.

By using Prometheum's infrastructure, Federated Hermes aims to offer these tokenized shares directly in traditional brokerage accounts, avoiding the need for investors to manage separate cryptocurrency wallets or navigate unregulated exchanges. The move follows similar tokenization efforts by other major financial firms, including BlackRock and Franklin Templeton, though Federated Hermes' proposal focuses on a wider range of fund types.

The initiative is subject to regulatory approvals and the development of appropriate custody and trading arrangements. Neither Federated Hermes nor Prometheum have disclosed a timeline for the launch of the first onchain fund shares.

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Analysis

Why This Matters

  • Mainstream adoption: A top-tier asset manager moving fund shares onchain signals that tokenization is no longer an experimental niche but a strategic priority for traditional finance.
  • Investor access: Tokenized shares could lower costs, enable faster settlements, and allow for fractional ownership, potentially broadening access to institutional-grade funds.
  • Regulatory precedent: The use of a registered broker-dealer like Prometheum may set a template for compliant tokenization, influencing how regulators treat digital securities.

Background

Tokenization of financial assets has been a growing trend in the crypto and traditional finance worlds. By representing assets as digital tokens on a blockchain, issuers can automate administrative tasks, reduce settlement times from days to near-instant, and enable smaller minimum investments. Major players like BlackRock have already launched tokenized money market funds, and JPMorgan has operated its own blockchain platform for intraday repo transactions. Federated Hermes, with its significant assets under management, is among the largest to extend tokenization to a broader suite of investment funds.

Key Perspectives

Federated Hermes: The asset manager sees tokenization as a way to modernize fund distribution, offering clients the efficiency of blockchain without requiring them to leave the familiar brokerage ecosystem. Prometheum: The digital securities firm provides the regulated infrastructure that allows traditional asset managers to issue tokenized shares while staying within SEC guidelines, positioning itself as a bridge between two worlds. Critics/Skeptics: Some market observers question whether the demand for tokenized fund shares will be sufficient to justify the operational complexity, and whether blockchain-based systems can scale to match the trading volumes of traditional markets. Regulatory uncertainty around the classification of tokens also remains a concern.

What to Watch

  • The timeline for regulatory approval of Federated Hermes' proposed onchain share classes.
  • Whether other large asset managers follow with similar offerings, accelerating the industry shift toward tokenization.
  • Trading volume and investor uptake of the first tokenized fund shares as a real-world test of demand.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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