Fund administration firm Apex Group said its Maltese arm has tokenized the shares of a fund representing an interest in gold bars. The company has been active in tokenization for three years, since it acquired FundAdminChain, with this particular tokenization using the Polygon blockchain.
Lake Geneva Investment Management is the asset manager (AUM $ 1.5bn), with the gold held by a Swiss custodian and the multi-class mutual fund domiciled in the Cayman Islands. Only professional investors can buy the fund shares.
Gold is increasingly popular as a tokenized asset, with HSBC tokenizing it for both professional and retail investors, and UBS recently conducting trials on a layer 2 public blockchain. Stablecoin issuers Paxos and Tether issue gold coins with a combined market capitalization of almost $1.5 billion. But neither are issued via funds.
For funds, blockchain can enable faster settlement and aid with transparency, given Polygon is a public ledger. By using smart contracts, it can help with automating the transfer agency process. There’s also the potential for fractionalization, enabling smaller minimum investment amounts, which allows a broader range of investors to participate. While it seems logical, not everyone is convinced that fractionalization is a massive benefit.
“We are proud to be the first financial services provider to launch a first of its kind share class from Malta. By leveraging tokenisation, we are enhancing operational efficiency as well as broadening the investor pool,” said Omar Cascun, Apex Group’s Country Head – Malta.
Apex’s tokenization track record
Apex has already been very active in tokenization. One of its clients is Hamilton Lane, which was amongst the earliest asset managers to embrace the technology.
Together they’ve been involved in multiple tokenizations, including one for a Luxembourg fund offered by Swiss bank Sygnum and a collaboration with funds distribution platform Allfunds Blockchain. There’s also a planned tokenization with Republic, the consumer facing platform, which recently enabled fractional exposure to Hamilton Lane funds in a conventional manner.
There’s a widespread recognition of the benefits of blockchain for transfer agency. Standard Chartered recently adopted the technology and was so impressed it is thinking about offering not just transfer agency services but reselling the FundsDLT powered platform as a solution.
Update: added details about the fund, corrected reference to Maltese fund
