Investment Union acquires tokenized shares of Metzler fund
In a significant move towards the future of asset management, Union Investment, a leading German asset manager with AUM €424 billion, has recently purchased tokenized fund units. This move comes as part of an industry-wide shift towards tokenization, with regulatory progress, growing institutional adoption, and operational pilot projects marking the current status of asset managers tokenizing fund shares.
Last week, Union Investment acquired tokenized fund units, further demonstrating their commitment to the token economy and digital assets. The fund shares are registered on the public Polygon blockchain, and the fund administrator in the fund issuances was Attrax Financial Services, a subsidiary of Union Investment.
The asset management sector is increasingly considering tokenizing not only fund shares but also underlying assets. This more radical approach, proposed by Calastone, a fund distributor owned by Carlyle, could potentially offer greater cost savings, faster transactions, new product offerings, and greater personalization of funds. Schroders, another prominent asset manager, is experimenting with Calastone's proposal as part of trials in Singapore.
Union Investment has been actively involved in advancing this space. They were a major investor in most of the European Investment Bank's digital bond issuances and participated in the first-ever secondary market trade of Siemens' digital bond on a regulated platform alongside DekaBank and 360X. This transaction underscores Union Investment’s commitment to building a scalable distributed ledger technology (DLT)-based financial ecosystem aimed at enhancing liquidity and efficiency in secondary markets for tokenized assets.
However, the tokenization of fund shares presents regulatory challenges. Tokenization involves converting fund shares into blockchain-based digital securities that offer greater accessibility, fractional ownership, and 24/7 trading capability. Though tokenization of registered investment company securities is permissible under existing laws like the Investment Company Act, secondary market activities on tokenized shares introduce complexities, especially related to compliance with trading restrictions under Section 22(d) and Rule 22c-1. Regulators are considering adjustments to facilitate secondary market trading while maintaining investor protections.
Ethereum remains a dominant blockchain for launching compliant tokenized securities due to its mature ecosystem, compliance tools, and integration with decentralized finance. However, improvements in regulatory frameworks and cross-border legal harmonization are underway but not yet fully resolved, necessitating continued collaboration between issuers, intermediaries, and regulators.
The future implications of these developments include scalability and liquidity improvements in capital markets as tokenized funds facilitate fractional ownership and global trading access. Regulatory evolution is also expected to better accommodate secondary trading of tokenized fund shares while balancing investor protection and market integrity. Broader institutional adoption is anticipated as asset managers leverage tokenization to reduce costs, enable instant settlement, and democratize access to investment products. Technological integration with blockchain platforms like Ethereum, combined with advanced compliance and custodial tools, forms a robust infrastructure for digital capital markets.
In conclusion, Union Investment's involvement exemplifies the broader trend towards institutional-grade tokenized fund products, which are poised to reshape asset management by enhancing liquidity, accessibility, and operational efficiency under evolving regulatory oversight. As the industry continues to evolve, we can expect to see more asset managers following suit, embracing the benefits of tokenization and ushering in a new era for asset management.
[1] Source: Deloitte, "Global Tokenization Market Outlook 2025-2028" [2] Source: SEC, "Tokenized Securities: An Overview" [3] Source: Ethereum Foundation, "Enterprise Ethereum Alliance" [4] Source: Union Investment, "Press Release: Union Investment buys tokenized fund units" [5] Source: European Blockchain Association, "Regulatory Landscape for Security Token Offerings in Europe"
- Union Investment's recent purchase of tokenized fund units highlights their investment in digital assets, propelling the asset management sector towards enhanced liquidity, accessibility, and operational efficiency.
- The tokenization of assets extends beyond fund shares, with proposals like Calastone's aiming to tokenize underlying assets, potentially offering greater cost savings, faster transactions, new product offerings, and personalization of funds.
- As more asset managers embrace tokenization, the industry anticipates broader institutional adoption, advancements in regulatory frameworks, and technological integration with blockchain platforms like Ethereum, creating a robust infrastructure for digital capital markets.
