Key Takeaways
- • Fund managers are increasingly adopting blockchain-based tokenised funds to leverage instant settlement capabilities and 24/7 trading on distributed ledgers, moving beyond speculative cryptocurrency exposure to capture structural efficiencies in asset trading.
- • Tokenisation enables digital representation of fund units as tradeable tokens on blockchain infrastructure, eliminating information asymmetries inherent in traditional securities systems where "lots of different people have a different version of the same information," according to Kieran Mullaley, global head of capital markets practice at Capgemini.
- • The UK Financial Conduct Authority published guidance last year on tokenised funds for retail investors, signalling regulatory openness to expanding access beyond institutional markets, though concerns persist regarding distributed ledger robustness and liability assignment.
- • Private markets tokenisation is accelerating market democratisation: State Street's 2025 Private Markets Survey indicates 56% of respondents expect at least half of private market flows within one to two years will flow through semi-liquid, retail-style vehicles, with private markets estimated at $25 trillion and projected to represent 30% of global AUM by 2033.
- • Large institutions including exchanges (LSEG's Digital Markets Infrastructure) and custodians are actively developing infrastructure to automate private fund lifecycles and support tokenised investment structures to serve family offices, high-net-worth individuals, and emerging investor segments alongside traditional allocators.
Summary
The tokenised funds market represents a fundamental shift in how financial institutions approach asset settlement and investor access rather than a cryptocurrency speculation play. While retail clients may associate blockchain with bitcoin volatility, institutional fund managers are targeting the underlying technology's transactional advantages: distributed ledgers enable simultaneous record-keeping across multiple nodes, allowing real-time settlement 24/7 without the information fragmentation that characterises traditional securities trading. Capgemini's Kieran Mullaley articulated this inefficiency clearly, noting that current systems force multiple counterparties to maintain disparate versions of identical transaction data.
The structural mechanism centres on tokenisation itself—the creation of digital representations of fund units that are traded directly on blockchain infrastructure rather than settling through traditional intermediaries. Rather than replacing fund units entirely, the innovation allows units to be "minted" as tokens onto distributed ledgers, fundamentally streamlining the settlement architecture. This approach has already gained traction in institutional markets, with multiple fund managers launching tokenised offerings designed specifically for large allocators seeking operational efficiency.
Regulatory frameworks are gradually formalising around this infrastructure. The UK Financial Conduct Authority's recent publication of guidance on tokenised funds for retail investors signals official recognition that blockchain-based structures can serve broader investor bases beyond institutional participants. However, regulators and market participants remain concerned about liability and operational robustness—specifically, whether distributed ledger networks can provide equivalent safeguards to legacy centralized trading systems, and how responsibility is assigned across decentralised architectures.
The expansion reflects deeper demand-side pressures. State Street's 2025 Private Markets Survey found that 56% of respondents expect at least half of private market flows within one to two years will channel through semi-liquid, retail-style vehicles. With private markets estimated at $25 trillion and projected to represent 30% of global assets under management by 2033, infrastructure providers including LSEG are building tokenisation-enabled platforms designed to automate fund lifecycle management and serve family offices, high-net-worth individuals, and emerging segments alongside traditional institutional capital. This scaling requires greater transparency, modernised fund structures, and significantly elevated automation—precisely the operational capabilities tokenised infrastructure promises to deliver.
The structural mechanism centres on tokenisation itself—the creation of digital representations of fund units that are traded directly on blockchain infrastructure rather than settling through traditional intermediaries. Rather than replacing fund units entirely, the innovation allows units to be "minted" as tokens onto distributed ledgers, fundamentally streamlining the settlement architecture. This approach has already gained traction in institutional markets, with multiple fund managers launching tokenised offerings designed specifically for large allocators seeking operational efficiency.
Regulatory frameworks are gradually formalising around this infrastructure. The UK Financial Conduct Authority's recent publication of guidance on tokenised funds for retail investors signals official recognition that blockchain-based structures can serve broader investor bases beyond institutional participants. However, regulators and market participants remain concerned about liability and operational robustness—specifically, whether distributed ledger networks can provide equivalent safeguards to legacy centralized trading systems, and how responsibility is assigned across decentralised architectures.
The expansion reflects deeper demand-side pressures. State Street's 2025 Private Markets Survey found that 56% of respondents expect at least half of private market flows within one to two years will channel through semi-liquid, retail-style vehicles. With private markets estimated at $25 trillion and projected to represent 30% of global assets under management by 2033, infrastructure providers including LSEG are building tokenisation-enabled platforms designed to automate fund lifecycle management and serve family offices, high-net-worth individuals, and emerging segments alongside traditional institutional capital. This scaling requires greater transparency, modernised fund structures, and significantly elevated automation—precisely the operational capabilities tokenised infrastructure promises to deliver.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.