Today, the Algorand Foundation, Archax, and Quantoz Payments announced:
- The first ever tokenized money market fund has arrived on Algorand following the issuance by Archax of tokenized interests in abrdn’s €3.8 billion Euro Money Market fund1.
- Integration between Quantoz Payments and Archax allows for the use of EURD electronic money on the Archax digital assets platform.
- Native “no-code” atomic settlement of EURD/fund token in peer-to-peer secondary market transactions enables instant execution of interdependent transactions in a predefined order.
Combining robust tokenized assets, on-chain digital money, and native atomic settlement, the partners have been able to illustrate the feasibility and efficiency of moving the end-to-end investment and cash settlement process on-chain: investment, asset transfer, trading, settlement, and distributions.
Nick Haasnoot, CEO of Quantoz Payments, comments: “The use of EURD to purchase Money Market Funds in tokenized format is a ramp up to deploy more tokenized financial instruments. Delivery Versus Payment via regulated electronic money will form the basis of an expected wide acceptance of this product, with opportunities for both retail and institutional investors towards a variety of assets.”
Graham Rodford, CEO and co-founder of Archax, comments: “There is now real momentum building for tokenized real-world assets, and yield-bearing, regulated instruments, like money-market funds, are at the forefront of this activity. Solving the “cash-leg” of on-chain settlement has generally proved more challenging than the “asset-leg” and the use of digitally-native money, like EURD, can be an important tool to unlock the benefits that on-chain financial markets can bring. We are pleased to be working with Algorand and Quantoz to deliver the improved transparency and efficiency that blockchain/DLT offer.”
Russell Barlow, abrdn’s Global Head of Multi-Asset and Alternative Investment Solutions, commented: “At abrdn, we are committed to leading digital innovation in investment management and are delighted to see continued progress in this field. The development highlights the importance of institutional infrastructure providers, and we congratulate Archax, Quantoz and the Algorand Foundation on this key milestone.”
“The future of finance is truly instant – including the instant finality of transactions. This partnership between Archax and Quantoz to bring both a digital euro and a tokenized fund to Algorand makes this a reality for registered investors across Europe,” said Eric Wragge, global head of business development and capital markets for the Algorand Foundation. “The impact of combining tokenized assets and a digital euro is significant, and we look forward to bringing even more innovation like this to Algorand’s institutional-grade, quantum-secure blockchain.”
EURD and Quantoz Payments
EURD, a programmable European Union digital euro, is issued on Algorand by Quantoz Payments, an Electronic Money Institution (EMI) authorized and regulated by the Dutch Central Bank. EURD in issuance are more than covered by a 102% surplus of high quality liquid assets that are subject to strict Central Bank oversight and held in a bankruptcy remote foundation, Stichting Quantoz. EURD may be created by sending funds via the SEPA payment network and holders have the right to redeem for par value at any time.
Asset tokenization and Archax
Archax is based in London and is the first-ever firm to be authorized by the UK Financial Conduct Authority (“FCA”) as a digital securities exchange, custodian and brokerage, as well as the first to be listed on the regulator’s Cryptoasset Register. Consistent with these regulatory permissions and its status as a distributor of abrdn products, Archax is able to a) purchase and hold fund units in bankruptcy remote trust, b) issue Algorand Standard Asset tokens representing beneficial ownership of the underlying fund units, and c) observe the Algorand blockchain to identify peer to peer transfers and ownership changes. Additionally, given its integration with Quantoz, it is able to accept, distribute, and redeem EURD, which can be used to accept deposits, process withdrawals, distribute coupons, interest pay-outs, or dividends.
Subject to Archax onboarding procedures, qualified investors may invest in, custody, and trade the range of tokenized products available on Archax’s digital assets platform, which includes access to the abrdn’s money market funds.
To abide by AML and regulatory requirements, tokens issued by Archax may only be transferred between wallets whitelisted by Archax.
Transaction orchestration and Algorand
A unique feature of the Algorand blockchain is that atomic swap functionality – controlled exchange of assets if and only if all parties fulfill their side of the bargain- is built into the protocol itself and does not require smart contract programming. Algorand atomic swaps allow for the execution of group transactions, without counterparty risk and with precise transaction ordering, enforced by consensus, a critical requirement of several types of complex financial workflows.
In addition, atomic swaps benefit from Algorand’s instant finality, which means that all transactions are final the moment a new block is created (~ 3 seconds). All interdependent transactions that are part of an atomic swap, are guaranteed to be executed in the same block.
