Local digital asset manager JellyC has announced a partnership that will enable the tokenisation of its suite of funds, providing investors with “unprecedented access to liquidity, transparency and compliance”.
On Wednesday, JellyC revealed that, in collaboration with liquidity solutions provider Liquidise and the “world’s first formally verified blockchain” Redbelly Network, the asset manager is hoping to deliver a fully liquid and compliant tokenised fund.
This, the firm said, will allow investors to benefit from real-time net asset value unit pricing, full transparency and auditability over ownership.
Celebrating the announcement, JellyC co-founder Michael Prendiville said this move will pave the way for the mainstream adoption of tokenised funds in the asset management sector.
“Through this partnership, we can provide our investors with unparalleled liquidity, transparency and compliance while also opening up new opportunities for us to interact with the market,” Prendiville said.
Under the agreement, JellyC will leverage the speed and inbuilt accountability layer of Redbelly Network, where all network users undergo a know your customer (KYC) process and are issued verified credentials.
This, according to the digital asset manager, will redefine the way funds are managed and traded, ensuring all parties know exactly who they are dealing with to meet compliance requirements.
“This partnership showcases how Redbelly Network’s unique composable compliance and instant finality can bring greater transparency, trust and efficiency to the management and trading of private equity and venture capital funds,” said Alan Burt, chairman of Redbelly Network, which was developed at the University of Sydney in collaboration with CSIRO.
“By ensuring that all users are verified through our KYC process, we enable our partners to know exactly who they’re dealing with, a critical factor for compliance and seamless collaboration.”
This last week has also seen President Donald Trump announce the launch of meme coin $TRUMP, which debuted during the Crypto Ball in Washington DC, days out of his inauguration.
Industry responds
Speaking to InvestorDaily, Global X investment strategist Marc Jocum explained that tokenisation could reduce the reliance on intermediaries, slashing settlement times and administrative expenses.
“For ETFs, it may enable innovative portfolio strategies like continuous rebalancing via smart contracts without all the transactional costs involved and help with settlement and transfer of underlying securities,” Jocum said.
“For example, instead of buying a share of CBA through the ASX and then going through the T+2 settlement cycle and then having that ledger entry be moved over to the investor’s broker account, instead the thing that we will be trading will be a digital entity itself (i.e. a CBA token).”
And unlike traditional shares, tokenised assets can be traded globally at any time.
“This opens up liquidity opportunities,” he said, cautioning, however, that excessive trading generally dampens investing outcomes.
The investment strategist also acknowledged other unresolved issues with tokenisation, including questions surrounding ownership structure, dividend eligibility and taxation.
“There may be some drawbacks or kinks to be worked out,” he said.
While JellyC is the first to do it in Australia, last March BlackRock unveiled its first tokenised fund issued on a public blockchain.
“It is one of the largest blockchain-based money market funds and is backed by short-term US Treasuries,” Jocum said.
Referring to it at the time as “the latest progression” of its digital assets strategy, BlackRock said its focus is on developing solutions in the digital assets space that help solve real problems for clients.
But reflecting on the global experience, Jocum said Australian fund managers face unique challenges, including on the regulatory front as well as infrastructure hurdles and potential liquidity risks.
“Australia’s evolving regulatory framework poses uncertainties around tokenised assets, especially as we are only starting to build the ground-level foundations of decentralised finance and blockchain technology,” Jocum said.
“The controversial ASX CHESS replacement highlights the challenges of replacing entrenched systems with distributed ledgers, as a gradual or staged approach may be required for tokenisation to succeed.
“It could also potentially fragment liquidity between tokenised and traditional market assets, leading to potential pricing discrepancies, perhaps during market volatility,” he said.
$12 billion economic opportunity
A report published late last year by the Digital Economy Council of Australia (DECA), the Digital Finance Cooperative Research Centre (DFCRC) and Ripple found that tokenisation of real-world assets (RWA) could revolutionise Australia’s financial markets, offering $12 billion annually in efficiencies.
The report, however, acknowledged that regulatory barriers within the country risk delaying progress as other nations advance.
Noting the existence of “several reasons” why the economic potential of tokenisation has not yet been unlocked, DECA, DFCRC and Ripple said Australia risks losing out on its slice of the global economic gains, estimated to be in the order of $2 trillion per annum.
As such, the trio highlighted three key recommendations for policy reform to support the tokenisation of RWAs in Australia, including a clear taxonomy for digital assets to resolve regulatory ambiguity, reform of licensing frameworks for digital asset markets, and a regulatory sandbox to enable digital asset markets.
“The future of RWA tokenisation in Australia hinges on the proactive and thoughtful development of regulatory policies that support innovation without compromising stability,” DECA, DFCRC and Ripple said.
“The opportunity to shape the future of finance is within reach, and with the right regulatory framework, Australia can seize this moment to drive economic growth and innovation on a global scale.”
