Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Crypto News: Wells Fargo's New Digital Cash; Franklin Templeton to Bring Funds to Stellar's Network

By Joe Tenebruso - Sep 23, 2019 at 5:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Powerful financial institutions are beginning to deploy distributed ledger technology so as to reap its many benefits.

Blockchain technology has the potential to reshape key aspects of the global financial system. Here are some notable recent developments that should help to further this megatrend.

Wells Fargo is building a new global payment system.

Wells Fargo ( WFC 3.52% ) announced plans for a new internal settlement service powered by distributed ledger technology (DLT). 

Wells Fargo Digital Cash, as the service will be known, will facilitate cross-border payments. The banking titan, which oversees $1.9 trillion in assets, says its DLT-based system will provide a "permanent, highly secure, and trusted record of transactions" that will reduce costs and allow for "near real-time money movement."

"As a result of the increasing digitization of banking services globally, we see a growing demand to further reduce friction regarding traditional borders, and today's technology puts us in a strong position to do that," Wells Fargo Innovation Group head Lisa Frazier said in a press release. "We believe DLT holds promise for a variety of use cases, and we're energized to take this significant step in applying the technology to banking in a material and scalable way."

Wells Fargo is planning to pilot the service in 2020, beginning with U.S. dollar-based transactions. The banking giant intends to extend the service to multi-currency transfers over time, eventually rolling it out across its entire global branch network.

"Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world," Frazier said.

Digital ones and zeros on top of $100 bills

Wells Fargo and Franklin Templeton are digitizing their operations. Image source: Getty Images.

Is this the start of the tokenization of the mutual fund industry?

Franklin Templeton Investments, a $700 billion asset management company, filed a preliminary prospectus with the U.S. Securities and Exchange Commission earlier this month for a new money market fund. What makes this fund unique among the plethora of money market funds already available is that its shares will be tokenized on the Stellar network. 

Stellar's blockchain-based platform is designed to serve as an open network for storing and moving money. It aims to make assets liquid and flexible by making it easy for users to convert tokenized assets quickly and cheaply. 

Franklin Templeton stated in its prospectus that it believes blockchain-based shares will provide increased transparency to shareholders and help to reduce settlement times. 

"Blockchain technologies have the possibility to knit traditional asset management products and services closer to transactional payments," the company said in a statement to The Block. "A registered money market fund that is backed by hard assets and registered with the SEC under the Investment Company Act of 1940, with its shares existing as native digital assets on a blockchain and held in a digital wallet, can be an ideal stable digital asset to be used in the new economy."

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$49.43 (3.52%) $1.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.