Archax, the UK regulated digital asset exchange, custodian, and brokerage, which also has Exchange permissions in Europe, today announced the launch of its Pool Token functionality on the Hedera Network. This new functionality facilitates on-chain, multi-asset portfolio or basket creation by putting a range of already tokenised assets into a new token. The range of underlying asset types can be wholly diverse too, from equity, debt, funds and cryptocurrencies allowing diverse investment strategies to be expressed in a single transferable token. The first Pool Token being minted on Hedera will hold equal parts of money market funds from four leading asset managers: Aberdeen, BlackRock, State Street, and Legal & General – effectively creating a natively digital ‘fund of money market funds’. This marks a milestone in the digital transformation of financial markets, offering institutional investors unprecedented flexibility in portfolio build and management.
Pool Tokens allow a rethinking of traditional mutual funds, baskets and ETFs toward a more efficient, composable model of investment management. Whilst the current collectives have certain advantages, these new instruments offer investors a way to hold both baskets and the underlying simultaneously increasing the utility of such instruments. Pool Tokens enable real-time portfolio assembly with instant settlement and reduced intermediary friction, by digitally representing investors' holdings in the constituent assets.
"This represents the launch of unprecedented flexibility in portfolio build and fund creation on-chain," said Graham Rodford, Archax co-founder and CEO. "By enabling the creation of Pool Tokens, an issuer could come to us to create a natively on-chain portfolio, basket, index or fund. Tokenised portfolios can be assembled, transferred, and managed with speed and flexibility, so we're eliminating the operational inefficiencies that have long plagued traditional investment structures - all while maintaining regulatory compliance and institutional-grade security."
The technology applications extend beyond money market funds to any asset with constituent parts that can be composed together, separated, or further pooled including - funds of funds, ETPs, indices, and structured investment products. This composability allows for financial engineering previously impossible in traditional markets.
This new Pool Token functionality has several benefits:
- Instant Fund Creation: By minting a token, which holds a range of diverse underlying asset types, each of which could be individually accessed or utilised.
- Instant Transfers & Composability: Entire portfolios can be migrated across platforms in seconds without complex paperwork or transfer agents, eliminating traditional friction.
- Pool tokens as collateral: Archax’s Nest network is specifically designed to support the use of regulated digital assets as collateral between institutional counterparties, so can facilitate the same with pool tokens. This also enables near-instant settlement - reducing market friction.
- Structured products: Combining low risk instruments like treasuries or money market funds with higher risk instruments such as cryptocurrencies.
Recent use cases where tokens were used as collateral, such as those involving Lloyds Banking Group, Aberdeen Investments, and Archax, demonstrate the transformative potential of tokenised real-world asset pool tokens.
Archax's comprehensive tokenisation platform, which can be white labelled, supports the creation and management of various pool token structures, enabling institutional counterparties to utilise a broad spectrum of tokenised pool assets as collateral. These include fund pool tokens, equity basket tokens, commodity pool tokens, and other real-world asset pool tokens that represent diversified holdings, rather than single assets.
