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Veronika Rinecker
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Veronika Rinecker
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Archax, a cryptocurrency exchange regulated by the United Kingdom’s Financial Conduct Authority (FCA), has partnered with Ripple (XRP) to launch the first tokenized money market fund on the XRP Ledger (XRPL).
This initiative brings tokenized access to Abrdn’s $4.8 billion (3.8 billion British pounds) U.S. dollar Liquidity Fund (Lux), “paving the way for enhanced operational efficiencies and institutional adoption of real-world asset (RWA) tokenisation”, said Archax in its X post from Nov. 25.
Archax, in collaboration with @Ripple, has launched the first tokenised money market fund on #XRPL.
This groundbreaking initiative brings tokenised access to @abrdn_plc $3.8 billion US dollar Liquidity Fund, paving the way for enhanced operational efficiencies and institutional… pic.twitter.com/9TpXhqBOtz
— Archax (@ArchaxEx) November 25, 2024
The tokenized fund will be available only to professional investors through Archax’s platform.
Tokenizing a Money Market Fund
By tokenizing a money market fund, the Archax and Ripple aim to streamline processes, reduce costs, and expand access to investment opportunities.
“The arrival of Abrdn’s money market fund on XRPL demonstrates how real-world assets are being tokenized to enhance operational efficiencies. There is no question that the on-chain economy is gaining traction,” said Markus Infanger, Senior Vice President at RippleX.
Duncan Moir, Senior Investment Manager at Abrdn, added: “Real benefits are to be had from leveraging the efficiency of moving the end-to-end investment and cash settlement process on-chain”.
According to Moir, Abrdn chose XRPL thanks to “its institutional-grade functionality, cost efficiency and built-in compliance capabilities.”
Additionally, Ripple will invest $5 million in Abrdn’s Liquidity Fund and offer its custody services, bringing years of experience in institutional-grade blockchain solutions.
Archax will provide the technology and infrastructure to facilitate the tokenization process. The company’s platform will also enable seamless integration of the tokenized fund into institutional workflows.
RWA Tokenization: A Booming Industry
The world of finance is undergoing a digital transformation, and RWA tokenization is at the forefront of this change.
By dividing assets into smaller, more affordable units, RWA tokenization democratizes access to previously exclusive opportunities such as investing in commodities or real estate. Blockchain technology enhances transparency, reduces fees, and increases liquidity, making investments more efficient and accessible to a wider range of people.
As a result, many leading financial institutions and consulting firms believe that the RWA tokenization market could be worth between $2 trillion and $30 trillion by 2030, according to a recent report by Tren Finance.
While McKinsey & Company estimates a range of $2 trillion to $4 trillion, 21.co projects a wider range of $3.5 trillion to $10 trillion. Citi is more conservative, predicting a $4 trillion market, while Roland Berger is more optimistic, forecasting a $10.9 trillion market. BCG anticipates a $16 trillion market, and Standard Chartered is the most bullish, projecting a massive $30.1 trillion market.
However, despite these varying estimates, all of these predictions suggest significant growth potential, as the sector is currently valued at $201.6 billion, including stablecoins, according to RWA.xyz.
In its October report, global consulting firm Boston Consulting Group (BCG) called RWA tokenization “the third revolution in asset management.”
In collaboration with Aptos Labs and Invesco, BCG predicts that tokenized assets could represent 1% of all global mutual funds and exchange-traded funds (ETFs) within seven years.
