Global Digital Finance Reports Results Of Tokenized Money Market Funds Initiative
Global Digital Finance (GDF) has reported the results of an initiative to test the viability of Tokenized Money Market Funds (TMMF).
As part of the working group 30 firms participated in the GDF Industry Sandbox, powered by Ownera, the firm which operates the FinP2P routers that implement the open FinP2P standard to test the use case for collateral mobility in TMMFs.
GDF said that over 70 firms were part of the working group including:
- S&P,
- Federated Hermes,
- R3,
- JP Morgan,
- Ownera,
- Finastra,
- Lloyds Banking Group,
- Hogan Lovells,
- LSEG,
- Archax,
- Blackrock,
- State Street,
- ISDA,
- EY,
- Commerzbank,
- Fireblocks,
- Northern Trust,
- Apex Group,
- Franklin Templeton
- Goldman Sachs.
GDF is a non-profit association of member firms that supports best practices for digital assets. The group holds a mission to promote the adoption of market standards for crypto by engaging with policymakers and industry participants.
The TMMF project took place involving participants in Luxembourg, Ireland, and the UK.
Ireland and Luxembourg host more many money market funds and cross-border funds in Europe.
The GDF report states that legal interaction between Luxembourg and the UK in respect of financial and investment contractual arrangements makes Luxembourg an attractive jurisdiction to establish TMMFs.
Currently, in Ireland there is no judicial authority in Ireland specifically addressing the legality of tokenized shares.
At the same time, the report states that Irish courts could treat digitally native TMMF shares in consistent with traditional shares.
Legal treatment in the UK is viewed positively and further certainty will arrive if the Property (Digital Assets) Bill is enacted.
Armin Peter, GDF Executive in Residence who is also a former Global Head of Debt Syndicate EMEA at UBS and a, former GFMA Board Member, said the collaboration between Fintechs and traditional finance in the working group was impressive.
The results were said to indicate no “fundamental barriers for TMMFs” thus indicating a transition from theory to reality.
With no fundamental barriers identified across legal, operational and regulatory dimensions, the sandbox demonstrated that TMMFs can transition from theoretical use cases to a production-ready collateral instrument across six simulations:
Amarjit Singh, UK Digital Assets Leader, EY commented on the project:
“The over 30 TradFi and Fintech firms participating in the sandbox have demonstrated that collateral mobility for TMMFs has arrived. This is an exciting next step in the continued uplift to the future market’s infrastructure, leveraging digital assets to bring real-world benefit to investors and financial institutions around the globe.”
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