Mutual Fund Giant Vanguard Wraps Phase 1 of Digital Asset-Backed Securities Pilot

Vanguard worked with blockchain startup Symbiont, BNY Mellon, Citi, State Street and others to model the full lifecycle of digital ABS settlement.

Jun 11, 2020 at 4:18 p.m. UTC
Updated Sep 14, 2021 at 8:50 a.m. UTC

Mutual fund giant Vanguard has completed the first phase of a blockchain pilot to issue digital asset-backed securities (ABS).  

The Valley Forge, Pa.-based investment manager worked in close collaboration with blockchain startup Symbiont, an unnamed U.S. ABS issuer, BNY Mellon, Citi and State Street. Vanguard modeled the full lifecycle of an ABS settlement on blockchain in the pilot. 

Vanguard’s end goal for the pilot is to improve the process of securitization with blockchain. The decades-old Wall Street practice of repackaging loans into bonds sold to investors is one that many firms are trying to reimagine with blockchain technology. In March of this year, mortgage equity startup Figure securitized $150 million in home equity loans

Vanguard and Symbiont have been working together to use blockchain technology in capital markets since December 2017. Vanguard hopes to see faster, more transparent and more automated markets because of the technology. 

“Vanguard is dedicated to providing innovative, world-class solutions that help advance the financial services industry,” Warren Pennington, principal and head of Vanguard’s Investment Management FinTech Strategies Group, said in a press release, adding:

“By digitizing and streamlining the ABS issuance process, we will be able to increase the speed and transparency of transactions while reducing costs and minimizing exposure to risk, which ultimately leads to a more efficient business model for future generations of capital market activity.”
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