Aligning with the start of the Singapore FinTech Festival, market giants Citigroup and Fidelity have announced that they are launching a proof of concept of an on-chain money market fund which includes a digital foreign exchange swap solution and real-time settlement as part of the Monetary Authority of Singapore's Project Guardian. Sadly the project has nothing to do with Bruno Mars.
Joining others in bringing tokenized money market funds to blockchain technology, the additional swap and real-time settlement around this proof of concept promises to help drive "seamless and real-time settlement of multi-asset position in different currencies".
This increased speed could create additional avenues for treasury management services to access USD yield in particular while managing non-USD funds.
There has been a trickly of tokenization of money market funds to date (Franklin Templeton being noteworthy for traversing multiple blockchains with their fund), with other real world assets testing how tokenization might improve efficiency and automation, lending and distribution of these products. No prevailing models have emerged as standard yet, with USA, Singapore, Cayman Islands and British Virgin Islands hosting many of the top institutional tokenized funds to date.
With huge projections for a move to tokenisation, with promises that banks can save up to US$20B per year and that more retail investors will gain access to products previously only available to sophisticated, wholesale and accredited investors, the tokenisation journey has huge potential, and no doubt some twists and turns, in the near to mid term.
By Michael Bacina
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