Tokenised Money Market Funds: Liquidity, Yield and the 24/7 Settlement Question | EBC12

Good afternoon everyone and welcome. I have good news for you . This is the last panel discussion of the day, and after it you can go to your dinners and drinks. But before we do that, let me introduce you to the stage today. My name is Javier.

I manage tokenization issues within the company and specialize in the implementation and commercialization of tokenized assets for financial institutions. And I'm one of the leading voices for digital assets on LinkedIn. So feel free to contact me and anyone here who you see on your LinkedIn screen. Today we're going to have a great discussion about tokenized money market funds, one of the hottest topics in the industry right now, and we're going to hear a variety of perspectives, um, from our panelists. Uh, before we start the panel, uh, I'd just like to give the floor to each of our panelists to introduce themselves and present the part of the tokenized money market value chain or infrastructure that you guys are focused on.

Want to get down to business first? Eh, it's nice to be here. It's very nice to meet you all. Uh, I'm part of BlackRock. Uh, for those of you who know, for those of you who don't, uh, we are an asset manager, a fiduciary for our clients, managing about $15 trillion in assets across multiple strategies, active, passive, various instruments, liquidity instruments, wealth instruments, and so on.

Uh, specifically in the area of tokenized money market equity funds, where we are in the value chain, we are product issuers product issuers . Uh, we started with liquidity fund products and money market fund products. Uh, just to take a step back, our view of digital assets is broader. We approach this through three pillars: cryptoassets, where we structure ETPs that provide access to Bitcoin and Ethereum through exchange-traded products, stablecoins, where we provide reserve assets to back regulated stablecoins, and we also use them as cash instruments for settlements on our tokenized products. It's very nice to be here.

Thank you very much. Thank you. Good day everyone. First of all, I am pleased to be invited to this conference. I represent Norges Bank, which is the central bank of Norway.

We've been around for 210 years, I think. Not in the blockchain space yet, only the last 5 years, I think. I lead the Organizations and CBC research project at Norges Bank. We are studying whether we should issue CBCs, like most other central banks. Last year, we concluded that we had found no reason to issue either retail or wholesale CBC, but we understand that there will be benefits and challenges in this tokenization space, which is likely to be implemented in the financial industry.

Therefore, we need to monitor developments and also take and also take any actions we deem appropriate to manage developments in a way that we deem appropriate in line with our objectives. Thank you. Hello everyone. My name is Philipp Muller. I work at the Swiss National Bank.

As Deputy Head of Back Office, I was co-head of the SNB Helvetia initiative, which focused on issuing wholesale CBDCs to banks. And in my current position, I'm more involved with the product side product side , right? We, as the Swiss National Bank (SNB) National Bank (SNB) , issue SNB bills, which are one of the underlying products of many money market funds traditional in Switzerland. So I can imagine that at some point, if tokenized money market funds really become popular, small and medium business (SMB) notes will also appear somewhere on that list. So, that's one side, right?

The product level, where we issue SMB notes, and the other side, I think, is really about the infrastructure perspective, where we as a central bank offer wholesale CBDCs, not necessarily for tokenized money market fund settlements, but rather for the products that underpin them. So glad to be here today. Thank you very much. Hello everyone. My name is Patrick Bjorklund.

I am an innovation strategist at Janus Henderson. So, I'm an asset manager, as are my colleagues, my colleagues to the left and right. We are the provider of the investment product itself in the value chain. So, we currently have $1.6 billion in tokenized assets under management in the form of a tokenized Treasury fund Treasury fund , a AAA-rated CLO fund , and an S&P 500 tracker.

We are looking at our blockchain our blockchain strategy in three ways, one of which is very relevant to this conversation, which is tokenizing our funds. We were very focused on tokenization for DeFi as a starting point because that's where we saw a clear appetite for that type of product, but we're actively looking at how we can start to expand into the more traditional space, so to speak. The second component is how can we consider blockchain technology to make our operations more efficient? So, we're actually integrating it into our broader operational processes to hopefully make our clients' lives easier, and also create better risk and return profiles within the investment policy statements that we adhere to. And finally, we have a small venture capital arm where we take early-stage positions in companies that contribute to this second pillar.

Just to provide a little bit of context, but it's great to be here. I look forward to the conversation. Perfectly. Now let's do... Yes, thank you very much.

I am pleased to be here at the European Blockchain Convention. I am grateful for the invitation. I'm Alistair Sewell. I am a senior investment director at Aviva Investors . Aviva Investors is the investment management arm of Aviva PLC, the largest diversified insurer in the UK, with a history spanning over 350 years.

So, you could say that I am one of the most traditional financial institutions. My role is to look after our traditional money market fund or liquidity business and I was also the architect of the recent launch of a tokenised share class of one of our money market funds. In addition, I am also the Chairman of the Association of Institutional Money Market Funds, a trade organization trade organization representing money market funds in Europe. Thank you very much. Just to prepare the ground for everyone here.

I know that ground for everyone here. I know that everyone has different experiences and understanding of the topic. So maybe we'll just start with something very simple. Let's talk about the actual use case use case , opportunities, and challenges you see with tokenized money market funds right now. I am opening up space for those who want to try.

I'm excited to get started. So, our story in the field of tokenized funds tokenized funds , tokenized liquidity products, began in March 2024 . The problem was quite simple then. There were stablecoin holders on the blockchain who held stablecoins but didn't actually receive any returns from them . Rules began to be implemented .

Now that the rules have begun to take hold, issuers are still unable to pay stablecoin holders a return. So return. So , going back to that time, the problem was that they had a gap in terms of stablecoin holders who wanted to stay on the blockchain but also have their holdings in yielding assets. Tokenized liquidity products essentially fill this gap. So, in essence, stablecoin holders could now place their money in profitable tokenized liquidity products on the blockchain.

And when they needed liquidity needed liquidity , they essentially converted it back into liquidity instruments, cash on the blockchain. This solved two problems for them . First, they were able to remain in the same registry without actually leaving it. leaving it. Second, they were able to essentially reduce this trade-off between profitability and liquidity.

Hmm, just in time, just in case they can make a quick sale. This obviously allowed them to create complex treasury management workflows directly in the chain. Now this passage has since widened. 2.5 hours, 2.

5 years have passed. Hmm, and as tokenized instruments have started to gain popularity in institutional workflows, we see money market fund units potentially being considered for workflows like collateral mobility or liquidity management as it relates to treasury workflows. This is a new use case. We see a bigger breakthrough coming from here. And the visualization here is this: if you imagine a revenue asset that can be moved from one entity to another, be placed from one entity to another for trading workflows, for margin workflows, or, if you think about it from a corporate treasurer's perspective, moving it across the border, from one workplace to another, without having to actually redeem the asset, move the cash, and then re-subscribe to the asset.

This is a powerful construct that is worth starting to work on. So, today as we sit down, we have several products in our cash management suite that have been launched. Registered funds in the US, registered funds in registered share classes that are tokenized in EMEA, and we also have liquidity fund licenses in the Asia Asia Pacific region, including Hong Kong. The idea would be to unlock, from an institutional perspective, the use cases for collateral mobility and treasury workflows from a liquidity management perspective . This is where we are today.

Thank you for this start. I think I'll give the floor to Alistair and Patrick from an asset manager perspective and then I'll go back to the central bankers. Your opinion, Alistair. Hmm, a very similar story, actually, with Nikos. I'll try and I'll try to briefly talk about the initial use case.

But when we focused on the genesis of the initial products initial products that we deployed, um, it was very much in line with what Nikos describes, which is big. Companies operating on the network that exist beyond, you know, 2021 or whatever , we actually have a treasury balance, uh, without the ability to manage it in a way that, um, makes sense from a treasury management perspective, right ? So, I think it's an interesting mix of DeFi and TradFi, and hopefully, I don't know what the terms are for this what the terms are for this , but ultimately we can just call it finance. Um, and we've seen the DeFi space really penetrate TradFi's pockets of knowledge about how to look after large balances, right? So, I think right?

So, I think that was the initial use case use case . Um, I think one of the main obstacles is that the liquidity has to be in the format that the treasurer requires, right? So, I think one of the main barriers to wider adoption is that it just has to be in a currency that matches the user's use case, right? So you need to pay wages or whatever, it has to be in fiat currency. So, I think that's one of those core elements that we're trying to overcome at the moment.

Alistair? Yeah, I mean, I think the moral of the story is that tokenization is never the last thing asset managers talk about tokenization, because guys, guys, made some very valid points. So, I'll try to approach this from a slightly different angle. Um, and I think the angle, I would say, is this: we agree, broadly speaking, we agree that there is an interesting corporate use case for this technology, specifically combining a stablecoin with a tokenized money market fund. We believe this clearly demonstrates tangible value.

We believe value. We believe that the option of using it as collateral also clearly has tangible value. But the problem we're going to face is that I spend most of my time talking to ball bearing manufacturers, supermarkets, the trucking companies that transport lettuce from the grower to the store. These people appreciate some benefits, but they are very conservative. They don't necessarily trust the new, and there will be significant resistance from management, education, or whatever you want to call it.

There will be a lot of resistance to overcome before they start implementing this on a large scale. So, there are obvious challenges ahead, but ultimately it will lead to something faster, cheaper, and better. And because of these fundamental characteristics, um, we, you know, we believe in this story, and we launch products in this space. I think another consideration, and the only one I would mention, is that there is a debate going on right now about whether tokenization is a convergent technology or a revolutionary one. Some people argue convincingly on either argue convincingly on either side of this issue.

You can draw your own conclusions. However, if we accept the thesis that this is a revolutionary technology, then the scenario shows us that the actual use cases that it will finally satisfy may not have been considered yet. So, I think what's really interesting is that there are clear and identifiable moments that we see, and we have a pretty good idea of ​​when they might materialize. We have a pretty good idea of ​​the obstacles and challenges, but there's also this attractive prospect that she'll do something different. With some bright spark, maybe it's you out there in the room who will suggest this use case and implement it.

And that's what , in my opinion, makes this technology so exciting. So, in the spirit of prudent innovation, let's give the floor to central bankers. Who wants to take it? Maybe I can start, and I think, add to what you just said, right? I mean, as central bankers, we do n't have a crystal ball at our fingertips.

We do n't know where the market is going. We do n't know if tokenization will happen, and the traditional financial market infrastructure will be gone in 5-10 years. So what we're trying to do at the Swiss National Bank is prepare for what's going to happen, right? We already have fiat payments that work perfectly. So we're trying to see trying to see if we can do the same thing, send proposals to the central bank for money to enable faster and more seamless settlements for tokenized assets, because I think that's one of the most important aspects of having a monetary base.

The market will bring assets if they are on the same platform. At the very least, I firmly believe that this could be much simpler than today's financial market infrastructures, and could be a real game- changer in the future for supporting, transferring the underlying technology or underlying infrastructure into products that the market can then create. Cecilia. I think we have a pretty similar approach. In my opinion, central banks are not in the best position to innovate in payment systems or financial markets.

There are a huge number of people in this room and the next room who are better equipped to do this. Therefore, we must provide safe means of payment, i.e. central bank money, where financial market infrastructure is significant, i.e.

where failures or disruptions could affect financial stability. So, I think that would be the main position of the central bank of Norway to provide tokenized central bank money if it is necessary for such a financial market infrastructure. So let's dive a little deeper into the issue of calculations. And I'll draw an example of tokenized Treasury bonds that you've already issued. You know, if you look at traditional financial institutions, the safest form of money, cash, would be central bank money.

Is n't that right? Of course, believe it or not, it's not there yet. Isn't that right ? And now you have tokenized deposits from commercial banks and then stablecoins. You know, once you start using or having a business that has something to do with these products, whether it's a tokenized bank deposit or a stablecoin, you start thinking about what's the other side of my treasury management, right?

And it seems natural where a stablecoin, sorry, naturally where a tokenized money market fund would fit in. How we would move from the current origin story, where cryptocurrency projects needed a way to get a safer yield in the form of U.S. Treasury bonds, to a future where a much broader set of institutions, corporations, will be able to, you know, benefit from tokenized money market funds or not money market funds or not , is up to you. I, I, I, you know, I'll leave this question open for those who want to use it.

I can start. So, just to clarify the question. So how do we ...Excuse me, I have a sore throat...How do we move from a world we move from a world where stablecoins are a form of cash to a world where stablecoins become the only regulated liability on the chain?

Is this a question? Yes, let me clarify. So how can we move from a world where stablecoins are the primary end- user of cash for many of these products to a much broader ecosystem of participants ecosystem of participants that expands into a broader financial ecosystem? So, I think one thing that strikes me is the uniqueness of money, right? So ultimately when you think about what you're using as cash, and there was some wording there that's not mine, but I read it in the report.

I'm sure you can find it too . Um, when you have cash for payments and settlements, you start looking at what is the claim, what is the collateral, what is the form, what is the access. This is form, what is the access. This is essentially how you think when you use cash for such payments and settlements. So if you think about different forms of regulated liabilities, like floating on-chain, then you start thinking about, if I pay someone this form of cash, can they settle it in a form that we both recognize?

So, at this point we start to describe it using this universal term called compatibility. But ultimately, what this starts to mean in tangible terms is: I could pay or be settled through a stablecoin, but ultimately the banking infrastructure has to be able to accept it, convert it into a deposit liability, provide that recourse; What kind of security is there? And then security is there? And then when I look at it from the perspective of different banks, the infrastructure in different banks that requires a certain settlement mechanism, I start looking at central bankers central bankers . So, ultimately, from an investor's point of view, having different forms of cash different forms of cash is a good thing.

But from the perspective of investor resource, economic impact, and risk, the unity of money is an extremely important thing. So that's what we're moving towards. How will this happen? I think it's about these layers of infrastructure starting to come together. Primarily, starting with the banking infrastructure in terms of acceptance and interaction between tokenized deposits and stablecoins, and then the central bank level in terms of how this last level of settlement can be secured in a potentially non-intrusive way.

Good. I'll just continue on this subject. I mean, I completely agree. I think the unity of money is really important. I think everyone should play their part in this infrastructure, right?

I mean, we, as central banks, provide cash to banks so that they can then provide cash to retail investors. They can issue stablecoins if they want, right? But really the question is what we are talking about in terms of which customers should be served. For us, it's definitely banks. We need to provide them with a safe and secure way to pay.

If they decide to use it, then that 's fine. If not, then 's fine. If not, then we probably won't be too happy about it because of financial stability, but that's exactly where we need to be. We need to make sure we innovate enough. We provide them in the form that our clients really need, and that could be wholesale CBDC.

Maybe it's still fiat money. Time will tell. I think maybe we should just zoom out a little bit. I also think we're facing a cold start problem in the sense that we have a great implementation with a use case that makes sense today. But what exactly is going to prompt, encourage, for lack of a better phrase, to start thinking seriously about implementing some of these, you know, some of these new technologies?

And I think it's about what utility the specific asset itself can bring, regardless of what technology underlies it. I think that, speaking of, you know, building on what you said earlier, it's, you know, the blockchain element, and going back to what you think about your clients that you're talking to and that are managing these Treasury bonds. Hmm, the less we can talk about the infrastructure itself, the more about the usefulness of the result on the other end. And I think that technology itself has the potential to make many interesting and exciting things possible. Hmm, but what infrastructure needs to be created to make this possible?

And I think that in the medium to short term, there will probably be a lot of intermediate solutions. So, you know, instant settlement and being able to access your cash instantly before you can use it, before you can use a money market fund as cash, you know, we need to provide some kind of intermediate layer until we get to that point. So, we took a step in that direction by offering a kind of instant redemption service that settles almost instantly for tokenized treasury bonds. This is an exciting step in the right direction right direction , but obviously not scalable. But at least it's kind of an option to move further down that curve to attract people through utility while liquidity naturally grows.

Let me just leave it at that, okay? So do you think that for a tokenized money market fund to have instant redemption at scale, do we really need to have self- issued Treasury bonds on-chain? Um, I mean, can you repeat the question? Sorry. For a tokenized money market fund to have instant redemption at scale...

Yes, because the liquidity sleeve is just one solution, but it can't scale that, right? No, that's right. So does it make sense that we need to have our own treasury bonds on-chain? I think it certainly helps, or, you know, similar to what happened in the ETF markets, you know, market makers or banks coming into them to be that bridge mechanism on a larger scale, because, God knows, pools of liquidity come, you know, at a premium. So, I think the closer we can get to comprehensive tokenized asset management, you know, that's certainly something that you know, if you think about it from an operating model perspective, that's certainly something that we would like to achieve.

But there are probably a few intermediate steps to get there. Of course. Yes, I just want to add one thing to that. I mean, a money market fund money market fund is a simple product, right? It is designed as a very secure way to store cash in a diversified format.

Money market funds are strictly regulated by multiple layers of regulation. There are strong protective barriers. Um, now, I think what's interesting here is that if we have underlying assets that are all tokenized, then obviously you can move towards this passport effect, as you explain, Patrick. It is highly desirable to reach this point. But until then , if you have a scenario where you want to achieve instant settlement 24/7, you will likely encounter a credit brokerage.

For example, a bank would purchase these shares and effectively provide the investor with a certain line of credit. That's great, and it will work, but it also changes the risk profile of a money market fund, because at that point you not only have classic fund risk, but also counterparty risk. And that's another proposal that may require, perhaps, changes in how they're regulated, how these risks are managed . So, at this point, it becomes a slightly different product, which I think would be a necessary step. But that probably won't be the end state, because the key point for cash, going back to this point about the unity of money, is that it needs to be very simple, very rigid, and really specifically risk-constrained so that it provides liquidity on time and at the right moment and at the right moment , regardless of market conditions.

Yes, I completely agree about, you know, when you talk about secondary market liquidity now, it's as a short-term solution, as a step towards achieving this long-term goal. Um, you know, in terms of secondary market liquidity right now for a tokenized money market fund, why do money market fund, why do you think there's not much in the market right now ? Um, you know, launching a tokenized money market fund is not an easy task. Um, that's a difficult task, especially for a very traditional investment manager. We're used to, um, you know, we have a value chain.

We are used to creating funds and selling them in traditional markets, using traditional processes. A tokenized fund does other things. It requires new thinking, perhaps new service providers to provide solutions to fill the gap. Um, it requires changes, operational changes. So this is a challenge–this is a task.

And I think we should remember that too, and it will be for you, Patrick. Um, but it's clear that artificial intelligence is now taking over a lot of strategy boards at investment managers. So, we have a significant commitment of resources to integrate AI into our processes and workflows. At the same time, we are trying to implement tokenization. You know, like in any business, we have limited resources that we need to focus on creating the best possible experience for our end customers.

AI is a big concept. Tokenization is difficult and competitive. I think maybe just to complement that, it's interesting to think about how much corporate resources you dedicate to this. I think our point is that AI is here and now, not to go off in different directions, no pun intended , but, um, it's here and now, so it requires here and now thinking, right? But we hold the view that blockchain has the potential to certainly become bigger for financial services in terms of infrastructure and system upgrades.

So I think it's worth thinking about now. But the reason we went down this path is because let's move to where the demand is today , to build trust, to build a real understanding of how it works, and to consistently move into our, so to speak, traditional business traditional business , and to be somewhat of a trusted part, a trusted partner for our customers, regardless of what form they take, to help them move into the ecosystem so that we can move away from liquidity pools and into a more active securities market. Yes, it is a challenge it is a challenge to direct your resources in the right direction right direction . So, we only have 15 minutes left, but I want to draw people's attention to how the market could evolve in the future. I would like to give the floor to Nikhil and the central banks on how you think the tokenized money market fund will evolve into a more scalable product and how this space will evolve ?

Beginning? I think it's very difficult to predict. Did you ask? How do you think tokenized money market funds will evolve, say, over the next 6-18 months? Honestly, I don't think tokenized money market funds have any place in Norway right now.

So I think the financial industry is looking at different kinds of spaces for tokenization. What would it actually be? I'm curious. For example, tokenized government bonds as a kind of collateral for a repo agreement. And tokenized reserves as another cash part.

So, we have, I mean, I think this will facilitate broader adoption in financial markets. And then maybe, you know, if I follow this line of thought, a tokenized money market fund would continue those specific initial initiatives. Right there. I imagine that tokenized reserves tokenized reserves , and then tokenized government bonds will form something that will facilitate broader financial inclusion in the financial ecosystem, and then maybe a tokenized money market fund, I think, to be honest, the Norwegian financial industry is a little bit behind when it comes to tokenization and realizing the potential benefits of tokenization. I think they believe that the current way technology is being used is quite effective, and especially at a general level, there are certainly areas where tokenization can reduce the amount of manual intervention in payments, especially from a security perspective.

But so far, at least I think, they have been somewhat reluctant to explore this area. Okay, I understand. Nick, will you join us? I think the scale, as I mentioned earlier, will come from collateral mobility and liquidity management workflows. This is where money market funds have traditionally been used as cash, as cash-like instruments on your balance sheet.

However, to achieve this scale, there are certain friction points in usage that need to be addressed. So you can look at these friction points at different levels, for example, as an issuer, it's important for us to have regulatory consistency across jurisdictions. Er jurisdictions. Er , regarding definitions, for example, what is a registry, what is a token, where can it be issued, where can it be calculated, etc. Because it helps us create a consistent operating model, ahem operating model, ahem , from a global perspective.

Uh, because our investors can be global, their requirements for the product, their requirements for how their requirements for how they want to hold it, how they want to hold, um, or use a tokenized money market fund, or a money market fund in general, can be kind of nuanced, depending on the jurisdictions. The second point, um, the second level that you could consider you could consider is infrastructure. And infrastructure touches on points that we've already touched on before, hmm, and much more. So, if you're thinking about cash, what are we paying for, um, with a tokenized money market fund? Is this cash the same as other forms of cash?

Can this cash be kept, ahem, in the operating model within the management procedure that I already have? So, Alistair mentioned behavior earlier. From an investor's perspective, it's very important not to view this as a new asset, but as an asset that is starting to have a greater impact on existing investor behavior. And the key investor behavior. And the key , uh, critical point here is storage.

So now that you're not talking about a new economic asset, but a traditional asset on a new rail asset on a new rail , which now needs to be stored in a different structure, which now needs to be given instructions perhaps in a different way. Storage becomes that key fulcrum that is important for investors to almost combine it with their usual behavior usual behavior . So if you think about where we are right now , for example, in the area of tokenized asset storage, it's an evolving space. So traditional custodians are stepping into this space, but it's not in perfect condition yet. So now it's kind of fruiting as a value chain.

So, from an investor's perspective, they're still faced with a decision about whether they can use a traditional custodian directly in terms of incorporating those assets into the flows of their operating model and so on. Do they need to create something, create a new operating model? There is a cohort of investors who have already entered this mix in some way, meaning they are already using digital forms of cash. Tokenized deposits already exist in several banks. Stablecoins have become somewhat widespread in institutions in terms of usage.

So, some of these workflows already exist. In terms of how this might relate to tokenized money market funds, it's still a work in progress. We briefly touched on secondary market liquidity, and this is an important point. To your question earlier about why it's not there yet? It's helpful to put the situation in perspective.

Money market funds have traditionally been a primary market instrument. Secondary markets are starting to gain importance in demonstrating the utility of a somewhat mobile tool now, as with a tokenized money market fund you can transfer it without intermediaries 24/7. This is how most products are structured today. So you start thinking about, can I roll it over whenever I want, can I also start getting liquidity on it just in case? And here you are, ahem, questioning the way the questioning the way the market has been structured for several years, and then saying that a new market paradigm needs to emerge.

It began to emerge with the creation of secondary market liquidity mechanisms, the ones that Patrick mentioned. But in terms of this growth, it's going to take time because you're actually starting to get to the heart of the market structure itself. And when you get to the heart of the market structure, you're essentially asking you're essentially asking , who has the incentive to almost create this RFQ or some other structure on the blockchain that would somehow expand the depth of the secondary market liquidity to appear on the blockchain itself. And that's what would create scale. Any comments?

I mean, I completely agree. I think one thing I would like to add, and where we are thinking deeply about this and engaging with our colleagues on this, is also the issue of KYC AML. And just portability just portability , like portable identification data identification data , if you will, right? I completely agree. And a one-time whitelisting, as opposed to creating limited liquidity spots, what do we call it?

Hmm, then it can't work, you know, in a compatible, uh, compatible way. So I think that 's another key thing that needs to be implemented, is something like regulatory compatibility, what shall we call it? Hmm, that's another thing I'd like to point out, because I think it needs to fall into place. Of course. So maybe just going back to your main part of the question, what changes are we going to see over the next, um, 6 months to a year, Harvey?

Hmm, I think this is a good conference, don't you ? I think all of you here in the room today had some nice conversations with other people about blockchains, about DeFi, and so on. And you look at this panel and you see that there are well-informed central bankers talking about tokenization, and you already have three fund managers in front of you who are already managing tokenized funds today. Uh, and that makes quite an impression, doesn't it? That's good.

This shows you the future. But the reality is that there are over 1,000 asset managers in Europe. So the harsh reality is that most investment managers have not yet launched tokenized products. So, I think products. So, I think what will change is that we will see two things.

First, I think we will start to see more and more investment managers bring the product to market. Uh, and I think that's great because every time someone comes up with a new product, it lifts everyone else in the market. This raises the level of education. This raises awareness. And this creates the potential for our industry to thrive and succeed.

So, there is a place for everyone here. But, I think for any investment managers in the room, you need to get down to business and launch a tokenized fund. Uh tokenized fund. Uh , yes, I'm looking at you, sir. Uh, this is the first part.

The second part, obviously, is how it is implemented. Uh, we at Ave Investors work with Ripple. We launched our tokenized fund on the XRP Ledger. There are other blockchains that others use. I think we will see the proliferation of different blockchains.

I think we will see blockchains used in specific use cases, perhaps targeting specific customer needs or evolving customer needs . So, I think it's about distribution. We will see more products in more forms, and that will raise a wave for all of us. This is actually a very interesting point regarding the thousands of others that are still ahead. And you know, you ahead.

And you know, you guys think that all your products have become multi-chain. Um, do you think there is a fragmentation issue in terms of liquidity around these chains? It seems like every time an asset manager wants to introduce a product to an end user, they need to figure out what the first—not one, not two what the first—not one, not two , not three, but five— chains you all need to integrate and release your product. Do you think there is a problem here? Or, you know, do you think it's just a natural evolution every step of the way, right?

Eventually, you know, there will be solutions for interoperability where one chain in one chain goes into another. Because now, you know, do you think that's true? So, again, maybe just try to step back and try to answer the question, you know, to some extent. I think we're at an interesting point in the broader blockchain journey, if you will. I mean, you will.

I mean, we sometimes call it the " call it the " iPhone moment," if you look at, for example, the development of the internet, there were, um, you know, a lot of companies that didn't really take off and didn't really come to life until we all had the internet. Uh internet. Uh , you know, Uber existed as Uber, as Uber Cab long before Uber was in your pocket, right? But there was no real reason to resort to that, you know, because you could just hail a taxi on the street. So, I think there are a lot of things we still have to figure out, as Alistair and Nick say.

Uh, and I think maybe, like, it remains to be seen, and it's just pure speculation on my part, that we have a lot of multi-tiered operating systems, uh operating systems, uh , just like we had a lot of PC operating systems a long time ago. And, as it turned out, a kind of unification took place around several of them around several of them . Hmm, that doesn't mean they don't satisfy, you know, individual specific use cases that might differ, whether it's transaction frequency or security, whatever . But I think there's probably going to be, you know, proliferation in the short term, and then maybe consolidation around the ones that best fit specific use cases. Hmm, but I think there are a lot of new and promising use cases, businesses, etc.

that we have n't seen truly realized yet because we're just getting to a stage like the iPhone. Just to add, um, and I agree with Patrick, um, it's helpful if you think of blockchains as ledgers. And at the heart of it, liquidity really depends on the security design in these registries. So, if you think about it, and again , without going into the details of what the structures actually look like, um, if you're using different blockchains, it doesn't necessarily mean liquidity fragmentation. If you structure the share classes or your ledgers in a way that it's all almost merged into one entity, if you will, or one share class, if you will, or one integrated accounting system, if you will...

So it really depends on the design. So, the fact that you use different blockchains, in my opinion, is not automatically related to liquidity fragmentation, unless you think about it differently. Hmm, maybe that just hints at me as the back office deputy, right? We are also a large asset manager at the Swiss National Bank. And I mean, if I look at my reality, I see that the front office really doesn't care about the calculations, right?

So for me, it's not that big of a question whether it's one blockchain, two blockchains, 10 blockchains, or whatever. Front offices will trade, buy whatever they want, and that will ultimately bring in a lot of money. And then it's more of a back-office problem–to figure out if this new world is better than the one we have today with Swift messaging. If we had one level, purely from an operational perspective, that would be great perspective, that would be great , wouldn't it? No coordination at all, no exchange of messages back and messages back and forth.

But there are other forces that eventually lead to several dozen levels. And we just need to make sure that we can safely and securely do the calculations on the backend the calculations on the backend , right? I think since we have 1 minute left, I think I'll just wrap up by saying that, you know, tokenizing my microphone has an ecosystem. And we are still very early. Um, I guess let's just end it here, shall we?

Imagine all of you having a superpower, right? You can accomplish one thing. This will give you an immediate impact on your business, right? What will it be like for the next 6-12 months? I think if we could change one thing in the next 6 months to really ensure a tokenized future, uh, I, I, I actually say, education.

Hmm, and the reason I say this is that even among investors, as well as tokenized fund managers , the level of knowledge and awareness of both the technology and its potential is still narrow. Therefore, it needs to become broad, and that means gaining broad understanding from the risk department, the compliance department, senior management across the firm and across the market. Because once this education is available, and once the concepts of today and the potential of tomorrow are understood, then we can move forward together again and ultimately achieve better results for our clients. A very boring answer, but I completely agree with it. And I'm just committed to continuing what we've been doing over the last 12 months, and we're increasingly talking to our large global customers about exactly that customers about exactly that .

And the difference in understanding is quite stark, isn't it? And I think trying to get people involved, some kicking and screaming, and some, you know, very interested and intrigued and excited about it. Uh, but just having this kind of educational material that really crystallizes, as Alistair says, both internally and externally, I think would be the biggest boon to moving this conversation forward on a large scale. Great, central bankers. I can only repeat what you said.

So, I think it's really about education and what blockchain can bring in terms of streamlining processes. And I think if everyone along the value chain sees that, then I think it has a real chance to get bigger and bigger, faster and faster. If I had a superpower, I would look into the future and look into the future and , uh, see a really good business case for tokenization, a use case where you can see a huge improvement huge improvement when it comes to, uh, more efficient, more secure, and, uh, faster payment services or financial services. I think removing friction in this space really helps in scaling adoption. And going back to some of the points I mentioned earlier about how investors hold cash today, how they can invest that cash in tokenized income instruments.

Combining this with existing behavior has value for investors or a larger group of investors who are starting to see this value for themselves. And once that starts happening, there's a flywheel effect that would be like , how can I use cash in my workflows? How can I use cash in profitable workflows? Or in workflows with provisioning? It's almost starting to become something like a second skin, if you will.

So, going back to your point, I think removing friction, mainly from an infrastructure perspective, would be a good start. And how do you all take notes on the Telegram you check? So thank you, thank you very much. Thank you to the panelists. And thank you for coming.