U.K. Pension Giant L&G Looks to Enter Crypto's Tokenization Space

Legal & General (L&G), a prominent London-based pension and investment management firm with $1.5 trillion in assets under management, is set to explore the burgeoning field of blockchain-based tokenization. This move aligns with a growing trend among traditional finance giants to adopt digital asset technologies.

Key Takeaways

• L&G plans to make its liquidity funds available in a tokenized format.

• The firm aims to enhance efficiency and reduce costs through digitization.

• L&G's interest in blockchain technology dates back to 2019.

The Rise of Tokenization in Finance

Tokenization refers to the process of converting traditional assets into digital tokens on a blockchain. This method has gained traction among financial institutions, particularly after the entry of major players like BlackRock, which launched its BUIDL fund on the Ethereum blockchain. Other firms, including Franklin Templeton, State Street, and Abrdn, have also ventured into this space.

L&G's Strategic Move

Ed Wicks, the global head of trading at Legal & General Investment Management (LGIM), stated that the firm is evaluating ways to offer its liquidity funds in a tokenized format. He emphasized that digitizing the funds industry is crucial for improving efficiency, reducing costs, and making a wider range of investment solutions accessible to more investors.

Historical Context

L&G's exploration of blockchain technology is not new. The firm first announced its interest in 2019, when it revealed plans to utilize Amazon Web Services' managed blockchain system to manage and record bulk annuities for its insurance business. This early adoption indicates L&G's commitment to integrating innovative technologies into its operations.

Implications for the Financial Sector

The potential entry of L&G into the tokenization space could have significant implications for the financial sector. As more traditional finance firms embrace blockchain technology, the landscape of investment management may undergo a transformation. Tokenization could lead to increased liquidity, lower transaction costs, and broader access to investment opportunities for retail investors.

Conclusion

Legal & General's foray into the tokenization space marks a significant step in the ongoing evolution of the financial industry. As the firm seeks to leverage blockchain technology, it joins a growing list of financial giants exploring digital assets, signaling a shift towards a more digitized and efficient financial ecosystem.

Sources

• London-Based Pension Giant Legal & General Looks to Enter Crypto's Tokenization Space, CoinDesk.

• Gigante británico de pensiones L&G busca entrar en el espacio de tokenización de criptomonedas, CoinDesk.

• Ang London-Based Pension Giant Legal at General LOOKS to Enter to Crypto's Tokenization Space, CoinDesk.

• Legal & General, le géant londonien des fonds de pension, LOOKS à entrer dans le domaine de la tokenisation des crypto-monnaies, CoinDesk.

• A gigante de pensões Legal & General, sediada em Londres, LOOKS entrar no espaço de tokenização de criptomoedas, CoinDesk.