Abrdn, one of the top five UK asset managers, has invested in Archax, an FCA-regulated digital securities and crypto exchange purely focused on institutions. The asset manager with around $560bn in assets under management becomes the largest external investor.
The startup initially focused on security tokens for several years and more recently expanded into crypto. The exchange will launch later this year. Security tokens can include tokenized stocks, bonds, funds, carbon credits and other assets.
Archax CMO Simon Barnby confirmed the abrdn relationship also involves a strategic partnership to tokenize funds.
Meanwhile, abrdn said it would ‘connect existing offerings’ through tokenization, enable investor access to digital securities, and generate efficiencies by adopting blockchain.
Regarding the point about enabling investor access, the distribution of security tokens is one of the biggest challenges. Abrdn recently spent £1.5 billion ($1.8bn) to buy Interactive Investor, a large UK online personal investment platform with 400,000 customers.
“Archax is one of the most promising UK players in this next expected high growth area in finance – the use of digital and tokenized securities with same-day settlement,” said abrdn CEO Stephen Bird. “In that sense, the growth of the digital investment market is about much more than cryptocurrencies.”
While most FCA registered crypto exchanges are licensed for anti-money laundering, Archax’s license allows it to issue and list tokenized digital assets, as well as being regulated for custody and brokerage.
The news follows yesterday’s announcement that the world’s largest asset manager BlackRock will launch a bitcoin private trust after previously announcing a collaboration with cryptocurrency exchange Coinbase.
However, the abrdn news is less about crypto and more about security tokens. Last month the UK Investment Association (IA) called for the government and FCA to create a framework for tokenized funds. There are already UK plans to create a DLT sandbox for financial market infrastructures.
Other UK participants in the funds sector that have already deployed blockchain include Calastone, FundAdminChain, which Apex recently acquired, and UK trade body TISA.
