Archax, a UK-regulated digital asset exchange, broker, and custodian, has collaborated with Ripple Labs to tokenize a money market fund managed by abrdn on the XRP Ledger (XRPL). According to Ripple’s press release, this marks the first time a money market fund has been tokenized on the XRPL, further positioning the blockchain as a platform for real-world asset (RWA) tokenization and institutional decentralized finance (DeFi).
The fund in question is part of abrdn’s £3.8 billion US dollar Liquidity Fund (Lux). The collaboration aims to reduce operational costs and enhance settlement processes by utilizing the XRPL’s blockchain infrastructure. The integration of tokenized funds on XRPL reflects the growing adoption of blockchain technology in capital markets.
Ripple points out that McKinsey has noted that tokenized money market funds currently manage over $1 billion in assets globally. Market projections suggest the total value of tokenized assets could reach $16 trillion by 2030, indicating increasing demand for blockchain-based solutions.
Ripple has committed $5 million to tokens representing abrdn’s fund as part of a broader initiative to allocate funds to RWAs available on XRPL.
Representatives from abrdn, Ripple, and Archax commented on the project’s implications for financial markets. Duncan Moir, Senior Investment Manager, abrdn, emphasized the efficiencies gained from moving investment and settlement processes onto blockchain technology, noting XRPL’s compliance features and cost-effectiveness.
Meanwhile, Markus Infanger, Senior Vice President for RippleX, had this to say:
“The arrival of abrdn’s money market fund on XRPL demonstrates how real-world assets are being tokenized to enhance operational efficiencies, while further reinforcing the XRPL as one of the leading blockchains for real-world asset tokenization. There is no question that the on-chain economy is gaining traction. By working with companies like Archax, we are excited to help financial institutions like abrdn to seize the incredible opportunity represented by blockchain and digital assets technology to deliver utility at scale.“
As for Graham Rodford, the CEO of Archax, he said:
“Financial institutions are understanding the value of adopting digital assets for real world use cases. There is now real momentum building for tokenized real-world assets, and Archax is at the forefront of tokenizing assets such as equities, debt instruments and money market funds. In collaboration with Ripple, we are excited to help our clients such as abrdn, which manages over half a trillion pounds in assets (as at Q2 2024), to bring them to the XRPL using Archax’s tokenization engine. Institutional buyers can now purchase abrdn’s Lux fund directly from Archax in token form.“
Since 2022, Archax has utilized Ripple’s custody solutions to manage tokenized assets. Ripple Custody draws on its experience with institutional clients and regulated entities to enable secure tokenization, storage, and exchange of digital assets on XRPL.
Featured Image via Pixabay
