Federated Hermes plans its first tokenized fund shares with Prometheum

Federated Hermes plans to issue its first tokenized fund shares early next year, according to CoinDesk, moving past the third-party wrappers the Pittsburgh manager used for earlier blockchain work. The firm manages $911 billion.

Federated Hermes has partnered with Prometheum, a New York-based digital securities infrastructure provider. The products will be offered through traditional brokerages and financial advisers, the companies told CoinDesk in a report published Tuesday.

Money market funds are a likely starting point, Kevin Barr, Federated Hermes' director of digital asset products and platform, told CoinDesk. "There's enormous interest in the industry at large around tokenized money market funds," he said, adding that the category aligns with the firm's liquidity funds franchise.

Tokenized money market funds and U.S. Treasuries have led Wall Street's tokenization effort. They let companies and institutional investors earn yield on cash reserves while moving assets around the clock, and CoinDesk reports the tokens can also serve as collateral for loans or trades.

The plan goes beyond the firm's previous blockchain work. Federated Hermes has worked with London-based Archax, Goldman Sachs and Singapore-based Conduit Digital to create tokenized representations of existing investment products, arrangements in which third parties issued digital versions of conventional fund holdings. The new effort puts the asset manager in the issuer's seat, Barr told CoinDesk.

Citi has projected the tokenized securities market could reach $5.5 trillion by 2030. A Dune report covered in this publication estimated total tokenized real-world asset supply above $34 billion in 2026.

In September, this publication reported that Goldman Sachs put its $100 billion Treasury fund, FTIXX, on Lynq for crypto firms. FTIXX stayed a traditional fund rather than a tokenized one, and Lynq gave digital-asset firms a place to park cash between trades. Federated Hermes intends to issue the tokenized share classes itself.

Federated Hermes has not yet disclosed which funds it will tokenize or which blockchains the shares will use, and the commercial terms of the Prometheum partnership were not disclosed. The shares are due early next year.