Federated Hermes, an investment manager overseeing $911.6 billion in assets under management, has entered a partnership with crypto infrastructure provider Prometheum to bring tokenized funds to brokerage clients. The first product under the collaboration is expected to launch in the first quarter of 2027. Tokenized funds represent ownership of an investment vehicle as digital tokens recorded on a blockchain.

The planned collaboration, announced Tuesday, pairs Federated Hermes' investment management business with Prometheum's SEC-registered, FINRA-member broker subsidiaries, according to the announcement. The two firms aim to make tokenized products available through the brokerage accounts and adviser relationships that investors already use.

Under the arrangement, Prometheum subsidiary ProFinancial will support distribution. Prometheum Capital will provide custody, clearing and settlement for its customers and will make Federated Hermes' tokenized products available to introducing brokers through its correspondent clearing platform, an arrangement in which introducing brokers maintain the client relationships while a clearing firm handles back-office processing.

The announcement did not identify the first fund, its underlying investments, or the blockchain network it would use.

"Tokenized funds are the logical next step for our broker-dealer and RIA clients, who increasingly see demand for on-chain access to traditional," said Kevin Barr, director of digital assets at Federated Hermes.

Barr said the partnership would allow the asset manager to distribute products through regulated intermediaries while applying the operational and investment standards used across its existing fund lineup.

For Prometheum, the collaboration is intended to establish a route for asset managers to issue and distribute digital securities through conventional brokerage infrastructure.

"Until now, tokenized funds have primarily been issued on platforms that sit outside the mainstream brokerage system where most Americans invest," said Aaron Kaplan, Prometheum's founder and co-CEO.

Kaplan described the partnership as a potential model for combining an asset manager with registered brokers providing offering, custody and clearing services.

The firms pointed to tokenized funds, particularly money market funds, as a use case that has already demonstrated investor interest in blockchain-based access to traditional investments. Their collaboration focuses on extending that access through brokers and investment advisers.

Prometheum's network also includes a secondary trading platform and an SEC-registered digital transfer agent. The announcement did not specify whether the initial Federated Hermes product would support secondary trading at launch. That question, along with the first fund's identity and its underlying blockchain, remains open heading into the expected first-quarter 2027 launch.

The partnership adds to the growing overlap between crypto and traditional finance. As crypto platforms expand into tokenized stocks, asset managers are moving investment funds onto blockchain infrastructure. Federated Hermes and Prometheum aim to connect those products with the brokerage accounts and adviser relationships investors already use.