A group of large banks and other financial institutions is ramping up efforts to 'tokenize' global equity and bond markets via Solana, a blockchain best known for hosting the meme coins of Donald and Melania Trump, reported the 'Financial Times'.
R3, a British software company that develops blockchains for some of these major institutions, closed a deal yesterday with the Solana Foundation, allowing it and its clients to use Solana's blockchain. In return, the foundation will make an undisclosed investment in R3, and its president, Lily Liu, will join the company's board.
R3 has approximately $10 billion in tokenized assets across its networks and counts Euroclear, HSBC, Bank of America, the Bank of Italy, and the Monetary Authority of Singapore among its clients.
According to the report, the movement highlights how some of the largest banks, fund managers, and stock exchanges are experimenting with the tokenization of assets, such as stocks and investment funds, on public and decentralized digital ledgers. Advocates of tokenization believe that putting assets on the blockchain can open more markets to investors, accelerate settlement times, free up collateral, and reduce administrative costs.
The CEO of BlackRock, Larry Fink, called tokenization the 'next generation' of markets. Since the beginning of the year, the manager has attracted $2.8 billion to its tokenized money market fund, quadrupling its size as investors seek digital securities that pay interest.
The agreement with R3 is also an important victory for the Solana brand, which seeks to unseat Ethereum as the crypto-based financial infrastructure. Ethereum, long considered the 'mature network' of the crypto industry, has struggled to operate at the scale and speed necessary to handle trading and payment of securities. Solana promotes itself as more used, faster, cheaper, and better suited for large-scale use.
Despite BlackRock and Franklin Templeton already using Solana for tokenized money market funds, the blockchain is still best known for hosting meme coins, such as those launched by Trump and Melania in January.
Jens Hachmeister, head of issuer services and new digital markets at Clearstream, an asset settlement company, said he is 'excited about what is to come.' 'The convergence between public and private blockchains is no longer a future promise - it is happening now,' he told the 'FT'. 'This is a generational shift in how value moves.'
The agreement marks a strategic shift for R3, which for a decade sought to tokenize securities using distributed ledgers only among approved institutions.
R3's private blockchain Corda will be directly connected to Solana to accelerate transactions, although users are not required to move assets to a public blockchain. Clients will be able to choose between migrating to Solana or keeping assets private within Corda.
R3 CEO David Rutter said that the world of blockchains is evolving rapidly. 'The regulatory landscape has changed substantially and public blockchains have matured,' he stated.
R3's British subsidiary reported a loss of £54.6 million in the year to November, compared to a loss of £35.2 million in the previous year, although revenue grew by 57%, reaching £12 million.
Liu stated that R3's decision to connect its regulated financial network to Solana represents a powerful validation for crypto technology. 'Public blockchains were built to scale. This is where you have global distribution of financial assets,' she said.