SimCorp, Alloy and Franklin Templeton pioneer unified management of tokenized assets

Recognizing the potential and challenges of managing these assets, SimCorp and Alloy collaborated on an industry-first proof of concept. This innovative initiative enables Franklin Templeton’s BENJI token (FOBXX) - a tokenized US government money fund that invests in US treasuries - to be viewed as part of your total portfolio on SimCorp One, supported by Alloy’s Digital Asset IMS capabilities. This proof of concept marks a pivotal step in digital asset management, providing a unified platform for institutional investors to view tokenized assets alongside traditional public and private holdings. 

The rise of tokenized assets among institutional investors

Tokenized assets have grown by 600 percent in the past 18 months, from under USD 400m to over USD 2.7bn¹. These are digital representations of real-world assets such as equities, debt instruments, real estate, or even art. Institutional investors are drawn to tokenized assets for their potential to increase efficiency, usability, and cost savings compared to assets on traditional financial infrastructure.

The trend: Tokenized treasuries

Among tokenized assets, US treasuries stand out due to their significant growth. While stablecoins remain the largest application of tokenized assets (with an approximate USD 189 billion market cap²), tokenized treasuries have grown by approximately 1600 percent to over USD 2 billion in the last two years. Industry experts forecast that the tokenized asset market could reach USD 10-16 trillion by 2030³.

Tokenized treasuries offer several benefits over stablecoins and conventional bonds. They pay interest on the underlying assets and are regulated like securities, which increases trust and provides a clear legal framework. This regulatory status makes them more widely accepted as collateral in digital asset markets, with smaller value deductions (haircuts) applied, offering greater efficiency for liquidity management and financing.

Their near-instant settlement capabilities make them attractive for short-term financing and intraday repo transactions, also reducing settlement risk and potential CSDR fines. These distinctive features make tokenized treasuries an appealing choice for institutional investors seeking improved liquidity management and increased capital efficiency.

The challenges: Integrating tokenized assets

Despite their similarities to traditional assets from a technical portfolio perspective - a tokenized bond is still a bond - traditional investment management systems have struggled to incorporate tokenized assets. Existing platforms were not designed for blockchain-based assets and their related complexities, leading many institutional investors to use separate tools, which creates inefficiencies and limits portfolio transparency. Managing tokenized assets at an institutional scale within a holistic portfolio context has not been possible until now.

The solution: A unified management platform

To address these challenges, we collaborated with Alloy and Franklin Templeton to offer a new approach to view digital assets alongside your traditional investments. In an industry-first proof of concept, Franklin Templeton’s BENJI token (FOBXX) - a tokenized US government money fund that invests in US treasuries - has been integrated into SimCorp One, supported by Alloy’s Digital Asset investment management system capabilities. This integration allows asset managers to seamlessly view tokenized assets alongside public and private assets on one platform, providing a real-time total portfolio view. SimCorp clients can now view and manage their BENJI holdings alongside public and other private assets within a single, comprehensive platform. The collaboration opens up new avenues for potential capital efficiency and diversification, while leveraging existing investment technology. 

SimCorp One provides a true total portfolio view across public and private assets classes in one place to ensure our clients can make informed investment decisions. This includes new and emerging asset classes, such as digital assets where we see increased investments.

Niels Jacobsen, Principal Product Manager, SimCorp

Next phase: Exploring tokenized treasuries as collateral

The next phase of the collaboration will explore the ability to use tokenized treasuries as collateral in digital markets. Combining the benefits of tokenized treasuries with SimCorp’s streamlined collateral management capabilities will pave the way for innovative liquidity management strategies and investment options.

“These are exciting times for the industry as the use cases start to be defined for the different asset classes, and their strategies. Current market inefficiencies recognized within the collateral and financing workflows surrounding settlement risk will be negated significantly. Change is happening fast, and we are ready to provide that seamless investment experience to our clients if and when they decide to expand to digital assets” said Gary Clunie, Senior Director Product Management, SimCorp.

Please reach out to explore this with us.

Sources:
¹ rwa.xyz, Treasury Market Cap, 10 December 2024
² rwa.xyz, Total Stablecoin Value, 26 November 2024
³ Boston Consulting Group “Relevance of on-chain asset tokenization in ‘crypto winter’”; Standard Chartered: Real-World Asset Tokenisation: A Game Changer for Global Trade; Roland Berger “Tokenization of real-world assets: unlocking a new era of ownership, trading, and investment”.