UK asset manager Aviva Investors has issued its first tokenized money market fund (MMF) share class for the Aviva Investors US Dollar (USD) Liquidity Fund, after partnering with Ripple to explore tokenization in February. The tokens in the European UCITS fund have been approved by the Central Bank of Ireland and are issued on the public XRP Ledger. Given it is an existing money market fund, the other share classes in the fund already have assets under management of $1.23 billion with a £1 million minimum investment for the tokens.
The announcement described it as a “scalable foundation for future innovation in fund distribution and market infrastructure.” The “foundation” reference is a nod to the limited initial utility given the tokens are not digitally native but instead mirror a conventional book entry, with the two reconciled daily. The prospectus states that “Each Digital Token represents, and is at all times directly linked to, a corresponding traditional share of the Fund and cannot exist independently of such traditional share”. There is no real concern about the two getting out of sync as the tokens are not transferable.
As the shares and tokens can only be issued/minted and redeemed, the primary benefit appears to be the ability to hold the share as a token in a wallet. Collateral mobility is expected to be a major use case for tokenized MMFs, but the non-transferability limits their utility in this regard. While it is still possible to have a legal agreement such as a pledge in which the redeemed funds could go to the pledgee, the benefits of tokenization for collateral mobility include the ability to transfer control 24/7, which is not the case here.
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