BNP Paribas uses blockchain and native tokenization to cut settlement times and boost cross-border fund transaction efficiency.
Tokenized MMFs by BNP Paribas enable instant trade processing and greater retail access, reshaping traditional fund operations.
Industry leaders debate tokenization's scope as BNP Paribas advances digital finance while others downplay real estate potential.
BNP Paribas Asset Management has launched a pilot tokenized money market fund (MMF) to test blockchain in cross-border fund transactions. The $680 billion asset manager partnered with Allfunds Blockchain to create native digital shares of an existing Luxembourg-based fund. This initiative represents a step toward reshaping fund administration with distributed ledger technology (DLT). Consequently, BNP Paribas aims to streamline operations, reduce settlement delays, and enhance transparency.
Boosting Speed and Access through Tokenization
Besides enabling faster transaction settlements, tokenized MMFs improve real-time asset access. Traditional batch-based processes cause delays and inefficiencies in fund order execution. However, with tokenized shares, BNP Paribas can process trades instantly once the net asset value (NAV) is published. This feature shortens settlement periods.
Moreover, this technology ensures clients spend less time waiting for access to their investments. The project's architecture supports real-time fund processing, setting a new benchmark for liquidity and operational agility. Hence, retail investors can benefit alongside institutions.
Expanding Blockchain Use in Traditional Finance
The pilot builds on insights from the Eurosystem’s 2024 wholesale CBDC trials. Additionally, BNP Paribas Securities Services acts as the fund’s transfer agent. Its involvement ensures a strong link between traditional systems and blockchain-based fund operations.
Notably, Paul Daly of BNP Paribas Securities Services emphasized the edge of native tokens. These offer better exchange accessibility, quicker trade settlement, and tighter integration with digital asset markets. Furthermore, Ruben Nieto from Allfunds Blockchain highlighted that native tokenization facilitates a complete shift to digital finance. As a result, order processing becomes faster and less error-prone.
Industry Leaders Debate Tokenization Targets
While BNP Paribas embraces asset tokenization, some industry figures remain skeptical. During Paris Blockchain Week, Securitize COO Michael Sonnenshein criticized real estate tokenization.
He argued that existing systems work well enough. However, his perspective overlooks inefficiencies in real estate transactions. These include lengthy paperwork, high costs, and slow cross-border processes. Consequently, proponents of real estate tokenization argue that smart contracts can automate compliance and reduce fraud through secure, immutable ledgers.
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