As an advisor to both TradFi and crypto native firms, one trend I’m excited about is the potential of blockchain and tokenization to help asset managers serve the next generation of investors.
These financial institutions pride themselves on navigating complexity and pursuing innovative strategies. They manage trillions across private equity, credit, venture, and real assets. But for all their sophistication in portfolio construction, many still rely on infrastructure better suited for the fax machine era.
Investor records are kept in spreadsheets. Capital calls go out over email. Waterfall calculations are done manually. LPs get quarterly PDFs and little else. The technology stack underneath these firms is fragile, opaque, and overdue for a serious upgrade.
Blockchain isn’t a speculative detour; it’s a modern financial operating system. And for asset managers, it offers not just an opportunity to modernize fund administration and operations, but also to unlock new frontiers in product offerings to better serve their existing and future client base.
Modernizing Fund Infrastructure
The average investment firm still relies on a tangle of administrators, custodians, and transfer agents, each working from their own systems and reconciling records by hand during each stage of a fund’s lifecycle: inception, setup, fundraising and onboarding, operations, trading and liquidity, and closing. Because much of this process is manual and bespoke, mistakes happen, delays are common, and transparency is low, while the cost of compliance and administration continues to rise.
Blockchain and tokenization solves for these inefficiencies by standardizing workflows across multiple participants. A permissioned ledger, shared between GPs, LPs, fund admins, transfer agents, auditors, and more, can become the single source of truth for investor accounts, capital flows, and transaction history. Instead of fragmented systems, siloed information, and weekly reconciliations, everyone operates from the same data, updated and visible in real time.
Smart contracts can automate capital calls, distributions, and even complex waterfall logic, ensuring that the correct payments go to the correct counterparties, instantly and transparently. And the tokenization and interoperability of different asset types can enable automated, instantaneous settlement. No PDFs, wire delays, and human error.
These aren’t gimmicks – they’re operational upgrades. Investors can hold digital fund shares, settle redemptions in stablecoins, and track yield accrual in real time. For cash management, it’s a game-changer. For operational teams, it means fewer bottlenecks and cleaner audit trails.
Blockchain and tokenization aren’t just about liquidity, but an opportunity to replace a clunky patchwork of systems with a streamlined, programmable foundation for fund operations.
The Next Generation of Investment Vehicles
If blockchain is already modernizing fund infrastructure, the next frontier is even more exciting: using the technology to build products that couldn’t exist before.
Start with tokenized private credit. Just look at Apollo’s tokenized private credit fund, which has moved more than $100 million on-chain and exists simultaneously on multiple blockchains, making it interoperable with digital custody systems. Or, Franklin Templeton’s Benji platform, where tokenized money market funds live across numerous blockchains, allowing its investors to transfer shares peer‑to‑peer with stablecoins, earn intraday yield down to the second, and access tokenized money‑market liquidity. Meanwhile, BlackRock’s tokenized institutional money market fund has already surpassed $2.5 billion AUM a year after its launch.
These products offer more than operational improvements; they allow fractional ownership, secondary liquidity, and a radically more accessible wrapper for investors who want exposure to these products without the commitment of a traditional LP structure.
The most forward-looking firms are going even further: building entirely new kinds of on-chain products. Take on-chain yield vaults, a relatively new primitive in crypto, which are like a self-executing investment strategy.
Companies like Veda Labs are pioneering smart contracts that stake tokenized assets, sell covered calls, lend to protocols, or arbitrage rates across DeFi, allowing institutions like asset managers to offer white-labeled, branded investment strategies that automate execution while embedding compliance and fee logic directly into the protocol. No spreadsheets or intermediaries, just composable, auditable investment products built for digital-native allocators. Instead of relying on opaque NAV calculations, returns can be verified on-chain.
Put simply: this is a new category of investment product. More transparent than an ETF, more automated than a hedge fund, and infinitely more programmable than any legacy wrapper.
The Time to Build Is Now
Asset managers don’t need to abandon what they’re good at. But they do need to modernize how and what they deliver.
Blockchain isn’t a threat to private markets; it’s the upgrade private markets have been waiting for. A way to clean up back-office complexity, lower operational risk, and serve clients with products that are faster, smarter, and more productive.
The tools are ready. The infrastructure is live. And the first movers have already shown what’s possible. Asset managers who ignore this innovation risk getting left behind – because while others are still sending capital calls by email, the next generation of investment platforms is already being built: on-chain, in real time, and at scale.
