Asset managers Brevan Howard and Hamilton Lane are set to become pioneers in tokenizing assets using the upcoming Web3 infrastructure provider Libre protocol. This initiative is powered by Brevan Howard's WebN and Nomura's Laser Digital. The Libre protocol, scheduled to launch in Q1 2024, will leverage the Polygon network, providing asset tokenization and smart contract capabilities. It aims to support automated rebalancing for mortgages and separately managed accounts (SMA).
Brevan Howard and Hamilton Lane have formed strategic partnerships with Libre, aiming to explore opportunities for enhancing alternative investments. Victor Jung, Head of Digital Assets at Hamilton Lane, expressed optimism about the potential of tokenization to revolutionize investment management and trading practices. Alternative investments, which include assets like real estate, private equity, and hedge funds, often deviate from traditional investment categories, requiring higher minimum investments and having longer holding periods.
Tokenization, the process of converting asset rights into digital tokens on the blockchain, holds the promise of transforming alternative investments by increasing accessibility and liquidity, enabling fractional ownership. Major financial institutions, such as Citi, forecast the tokenization market to reach $5 trillion by 2030. For Brevan Howard, renowned for its focus on macroeconomic trading strategies, Libre provides a platform to tokenize its portfolio of illiquid assets. Hamilton Lane plans to utilize the protocol for tokenizing fixed income products.
Natalie Smith, Head of Strategy and Client Engagement at Brevan Howard, highlighted the advantages of fund tokenization, providing investors with a novel means to access strategies, offering more choices, and aligning with client needs. As of July 2023, Brevan Howard's assets under management (AUM) were estimated to be between $35 and $40 billion. Meanwhile, Hamilton Lane disclosed assets under management or oversight totaling $854 billion in September. The move towards asset tokenization, coupled with a focus on regulatory compliance, is expected to be a pivotal trend driving the growth of decentralized finance (DeFi) in 2024.
