Today Moody’s published a short report on tokenized funds, noting the popularity of funds backed by government bonds from traditional asset managers such as Franklin Templeton and WisdomTree.
Some touted benefits of fund tokenization include broader access through fractionalization, lower costs, and enhanced liquidity. However, so far the biggest takeup has been from the crypto sector for government bond-backed funds which don’t have these features. Moody’s acknowledges that a key reason for this is these funds are held on public blockchains and provide an attractive yield.
In contrast, stablecoins returns via DeFi lending protocols have been relatively low and volatile. For example, today users can earn more than 8% by depositing the USDC stablecoin on Aave. But yesterday the figure was below 4%, less than the return on a government bond fund. Moody’s concluded that crypto investors could get lured away during another crypto bull run. In that case, the target client must shift to traditional investors.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
