The US-based asset manager debuts a blockchain-enabled structure for its liquidity fund as onchain US Treasurys exposure nears $11 billion.
Northern Trust Asset Management has launched a tokenized share class of its NIF Treasury Instruments Portfolio, marking its entry into the digital assets market, according to the company.
The structure uses distributed ledger technology to maintain a digital mirror of share ownership, while the underlying portfolio continues to invest in short-term US Treasurys.
According to Monday’s announcement, the shares will initially be offered through BNY’s LiquidityDirect platform, which operates on Goldman Sachs’ Digital Asset Platform. The fund itself does not use blockchain technology or invest in crypto assets. Instead, authorized intermediaries are expected to maintain a blockchain-based mirror of ownership records for clients.
The NIF Treasury Instruments Portfolio invests in a diversified pool of short-term US Treasury instruments and seeks to maintain a $1.00 per-share value, though it is not FDIC-insured and may lose value.
Northern Trust Asset Management is the asset management arm of Northern Trust Corporation and manages about $1.4 trillion in assets as of Dec. 31, including $355 billion in liquidity strategies, according to the company.
The launch marks Northern Trust Asset Management’s entry into the digital assets market, according to the company.
Tokenized money market funds use blockchain technology to represent traditional money market portfolios, giving investors onchain access to short-term, yield-bearing assets such as US Treasurys.
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Tokenized money market funds have become one of the most significant applications of blockchain technology in traditional finance. By using blockchain-based ownership records, these funds aim to make settlement and transfers more efficient.
According to RWA.xyz data, nearly $11 billion in US Treasury debt is currently represented on public blockchains, making it the largest category of tokenized real-world assets.
Some of the world’s largest asset managers dominate the segment. BlackRock’s USD Institutional Digital Liquidity Fund holds about $2.2 billion in tokenized Treasurys exposure, followed by Franklin Templeton’s OnChain US Government Money Fund at just over $920 million.
Other companies have expanded the structure further. On Feb. 24, WisdomTree introduced 24/7 trading and instant settlement for its WisdomTree Treasury Money Market Digital Fund (WTGXX), enabling round-the-clock secondary trading of a registered tokenized mutual fund under the Investment Company Act of 1940.
As the sector expands, central banking institutions are examining potential risks. In November, the Bank for International Settlements warned that tokenized money market funds could introduce operational and liquidity vulnerabilities if redemptions accelerate or onchain liquidity thins.
