Federated Hermes to Launch First Onchain Fund Shares in Wall Street Tokenization Push

Integration into the Wall Street Ecosystem

Federated Hermes, which manages $911 billion in assets, intends to launch its first tokenized shares in spring 2027. This move aligns with Wall Street’s growing trend of integrating traditional investments with blockchain technology. In an interview with CoinDesk, Kevin Barr, head of digital products and platform, said the firm aims to issue tokens directly, surpassing prior collaborations where third parties tokenized existing products. Prometheum will provide regulated brokerage, custody, and clearing services, enabling tokenized funds to be available through traditional brokers and financial advisors. While exact details about which funds will be tokenized or which blockchains will be used remain undisclosed, Barr indicated money market funds are a likely starting point.

Transforming the Issuance Process

This step extends the adoption curve of tokenization among major Wall Street firms. Companies like BlackRock, Franklin Templeton, JPMorgan, and recently New York Life Insurance Company have begun introducing blockchain versions of traditional funds, believing the technology can modernize issuance, transfer, and settlement of assets. Supporters argue blockchain use for investment funds can accelerate settlement, automate accounting, and ease cross-platform transfers. Citi has estimated the tokenized securities market could reach $5.5 trillion by 2030. Federated Hermes has already taken steps in tokenization, partnering with platforms such as Archax in London, Goldman Sachs, and Conduit Digital in Singapore to create digital representations of its existing products. Those collaborations involved third-party issuance of digital versions of conventional funds.

Access Through Brokerage Accounts

By issuing tokenized shares directly, Federated Hermes strengthens its position in the digital finance landscape. Kevin Barr, who spent 15 years at BNY in bank custody and recently led digital and cash innovation, emphasized that the firm’s business model focused on liquidity management makes money market funds a natural starting point. These funds invest in short-term debt and offer investors a safe place to park cash while earning yield. Tokens representing money market funds and U. S. government bonds have been pioneers in Wall Street’s tokenization initiative, allowing institutions and investors to earn yield and move assets throughout the day. These tokens can also serve as collateral for loans or trades, enabling firms to put cash to work without selling holdings. Barr noted, „You can have instant movements of these funds,” highlighting the programmability potential that can be difficult or inefficient in traditional infrastructure.

A key element of the partnership with Prometheum is facilitating access to these products via familiar investment channels. SEC-registered broker-dealers will provide custody, clearing, and settlement, allowing the corresponding clearing platform to let other brokers offer Federated Hermes’ tokenized shares to their clients. Barr stressed that a major barrier to broad tokenization adoption has been access, not the underlying blockchain technology. Financial advisors and brokers need ways to offer tokenized funds without overhauling their entire systems. He said, „For us, it becomes a natural extension of how we distribute our products today, and everything makes sense from this perspective.” Long-term, Federated Hermes sees opportunity not just in distributing existing products in tokenized form, but in revolutionizing how assets are issued, traded, and settled over the long term.

Impact on the Market and Investors

By launching tokenized shares, Federated Hermes reinforces its position as a financial innovation leader while offering investors a more flexible way to access traditional funds. Potential benefits include faster transactions, lower costs, and increased transparency—critical advantages for institutional and retail investors. Additionally, using tokens as collateral for loans could unlock new liquidity opportunities and portfolio diversification.

Future Outlook

With launch planned for early 2027, Federated Hermes positions itself at the center of Wall Street’s tokenization revolution. The partnership with Prometheum and the commitment to issue tokens directly underscore its ambition to lead in this evolving space.