Author: Tuongvy Le, Source: Coindesk, Translated by: Shaw, Jinse Finance
As an advisor to traditional financial (TradFi) and crypto-native enterprises, I am excited about the potential of blockchain and tokenization, as it can help asset management institutions serve the next generation of investors.
These financial institutions pride themselves on navigating complex situations and pursuing innovative strategies. They manage trillions of dollars in private equity, credit, venture capital, and physical assets. However, despite their sophistication in portfolio construction, many institutions still rely on infrastructure more suitable for the fax machine era.
Investor records are kept in spreadsheets, capital calls are sent via email. Waterfall calculations are done manually. Limited partners receive PDF files quarterly, and nothing more. The technological architecture of these companies is fragile and opaque, urgently needing major upgrades.
Blockchain is not a speculative trick, but a modern financial operating system. For asset managers, it not only provides an opportunity to modernize fund management and operations but also opens up new avenues for expanding product offerings and better serving existing and future client bases.
Modernizing Fund Infrastructure
Most investment companies still rely on complex managers, custodians, and transfer agents, each using their own systems, manually reconciling records at every stage of the fund lifecycle (including establishment, preparation, fundraising and introduction, operations, trading and liquidity, and settlement). Since these processes are mostly manual and customized, they are prone to errors, frequent delays, low transparency, and continuously rising compliance and management costs.
Blockchain and tokenization solve these inefficiencies by standardizing workflows across multiple participants. A permissioned ledger shared by general partners, limited partners, fund managers, transfer agents, auditors, and others can become the single source of truth for investor accounts, fund flows, and transaction history. This eliminates disparate systems, isolated information, and weekly reconciliations, with everyone operating on the same data, updated and visible in real-time.
Smart contracts can automatically execute fund calls, distributions, and even complex waterfall logic, ensuring the correct amounts are paid to the right counterparties instantly and transparently. Tokenization and interoperability of different asset types enable automated, instant settlement without worrying about PDF files, wire transfer delays, and human errors.
These are not gimmicks but operational upgrades. Investors can hold digital fund shares, redeem in stablecoins, and track yield accumulation in real-time. For cash management, this is a disruptive transformation. For operations teams, it means reduced bottlenecks and clearer audit processes.
Blockchain and tokenization are not just about liquidity but provide an opportunity to replace clunky, cobbled-together systems with a streamlined, programmable infrastructure for fund operations.
Next-Generation Investment Tools
If blockchain is already revolutionizing fund infrastructure, the next frontier is even more exciting: using this technology to create unprecedented products.
Start with tokenized private credit. Look at Apollo's tokenized private credit fund, which has transferred over $100 million on-chain and exists simultaneously on multiple blockchains, enabling interoperability with digital custody systems. Or Franklin Templeton's Benji platform, with its tokenized money market fund distributed across multiple blockchains, allowing investors to transfer shares peer-to-peer using stablecoins, earn yields precise to the second, and access tokenized money market liquidity. Meanwhile, BlackRock's tokenized institutional money market fund has grown to over $2.5 billion in assets under management within a year of launch.
These products bring more than operational improvements; they allow partial ownership, secondary market liquidity, and provide an extremely convenient path for investors who want to access these products without committing to traditional limited partnership structures.
The most forward-thinking companies go even further: creating entirely new on-chain products. Take on-chain yield vaults, a relatively new concept in the crypto space that acts like a self-executing investment strategy.
Companies like Veda Labs are pioneering smart contracts that can stake tokenized assets, sell covered call options, provide loans to protocols, or arbitrage in DeFi, enabling institutions like asset management firms to offer white-label, branded investment strategies that can be automatically executed while embedding compliance and fee logic directly into the protocol. No spreadsheets or intermediaries, just building composable, auditable investment products for digital-native configurators. No reliance on opaque NAV calculations; yields can be verified on-chain.
In short: this is an entirely new category of investment products. More transparent than ETFs, more automated than hedge funds, and more programmable than any traditional investment tool.
Now is the Time to Build
Asset management companies need not abandon their strengths, but they do need to innovate how they serve and what they offer.
Blockchain is not a threat to private markets but the upgrade private markets have long awaited. It can simplify back-office complexity, reduce operational risks, and provide clients with faster, smarter, more efficient products.
The tools are ready, the infrastructure is online. Pioneers have demonstrated infinite possibilities. Asset managers who ignore this innovation risk being left behind by the times—because while others are still emailing fund transfer requests, the next-generation investment platforms are being built: blockchain-based, real-time, and at scale.
