In a recent video commentary, CryptoSpirit discusses a prominent report from JP Morgan Asset Management that identifies Hedera Hashgraph (HBAR) as a noteworthy example of a public permissioned distributed ledger, particularly in the realm of tokenization. This specific acknowledgment from a leading financial institution is significant, especially since JP Morgan typically employs broad and network-agnostic language in its analyses.
The report, titled “Tokenization of Money Market Funds,” derives insights from JP Morgan’s crypto asset management team, which includes initiatives like Kinext, previously linked to Onyx. In a section detailing digital asset infrastructure, the report categorizes different types of ledgers and highlights Hedera Hashgraph under the classification of “public permissioned DLTs.” This categorization indicates that while the network is open to all users, it is maintained by a curated group of nodes. In Hedera’s case, this group comprises major enterprises, including Google and IBM, reinforcing the idea that Hedera is well-suited for institutional tokenization, particularly in compliance with regulatory scrutiny.
JP Morgan’s findings pinpoint a current landscape where approximately USD 35 billion in traditional assets are tokenized on public blockchains, representing a minuscule fraction—less than 0.01%—of the total assets under management in the industry. The commentary underscores a substantial opportunity, with a staggering 99.9% of assets yet to be tokenized, emphasizing the vast potential for future growth.
The report places a strong focus on money market funds, noting that the nine largest tokenized funds currently hold about USD 8 billion in assets under management, distributed among eight different providers. At present, most of these funds are operating on what the video refers to as the “test ground” of Ethereum. The potential growth comes into sharper focus with an overall market of over USD 8 trillion in U.S. money market funds alone, not accounting for the global market.
Moreover, the video connects JP Morgan’s conceptual analysis to a practical pilot project underway in the UK, utilizing Hedera Hashgraph for live foreign exchange collateral. In mid-2023, a collaboration among abrdn, Lloyds Banking Group, and fintech Archax marked the UK’s inaugural use of digital assets as collateral. This initiative reportedly involved tokenizing units of an abrdn money market fund alongside UK gilts from Lloyds, with transactions executed on the Hedera public network.
The scale of the FX market in the UK is staggering, with the Bank of England estimating daily turnover at approximately USD 5.4 trillion, signifying a significant portion of global activity. The pilot’s goal focuses on enhancing programmable collateral management, aiming to streamline operations and mitigate risks during periods of market stress.
This development paints a promising picture for Hedera’s future, positioning the network as a viable option for institutional tokenization. Although the JP Morgan report does not endorse Hedera as a commercial partner nor assert plans to utilize it directly, its mere mention as a reference example in public permissioned DLT demonstrates its rising relevance in the financial sector.
For cryptocurrency investors, the implications are noteworthy. Should the trend of money market fund tokenization grow from billions to a more substantial percentage of global assets under management, there could be long-term demand for the supporting infrastructure, like Hedera. Thus, the network finds its place on the radar of significant banking institutions, marking a pivotal moment in its evolution as a leader in the tokenization landscape.
The discussion around the report raises critical questions about the current state of tokenized assets versus their potential. With only around USD 35 billion currently tokenized and a market forecasted to reach tens of trillions, the ceiling for growth is evident. The emerging landscape presents numerous opportunities, yet the tethering of Hedera to institutional-grade projects may well serve as a catalyst for broader adoption in the financial ecosystem.
