Tokenization of Alternative Assets:

In recent years, the alternative‑investment universe has exploded in both size and complexity. Private equity, private credit, real assets and hedge strategies now represent a major share of global assets under management, yet access to these opportunities remains restricted by high minimums, illiquidity and complex fund structures. Meanwhile, blockchain‑enabled tokenization is reshaping how investors can gain exposure to these traditionally opaque markets. The total market value of tokenized real‑world assets on public blockchains climbed from about $10 billion in 2024 to nearly $18 billion by early 2025 and to more than $24 billion across 194 issuers later that year. Private‑credit tokens and tokenized U.S. Treasuries are leading the charge, with assets under management in tokenized funds growing tenfold since 2022. This whitepaper explores how tokenization is democratizing alternative assets, assesses the benefits and risks for asset and wealth managers, and looks ahead to a trillion‑dollar on‑chain future.

Introduction

Alternative investments have moved from niche allocations to core portfolio constituents. Preqin estimates that global alternative assets under management (AUM) could climb from roughly $16.8 trillion in 2023 to over $30 trillion by 2030, reflecting investors’ search for diversification and yield. At the same time, retail and high‑net‑worth investors have shown a clear appetite for alternatives: a 2025 survey of financial advisors found that 92 % of advisors already use alternatives and 91 % plan to increase allocations over the next two years. Yet barriers remain. Traditional private‑market vehicles often require minimum commitments of $5 million or more and can lock up capital for a decade. Feeder funds and separate managed accounts lower minimums but are costly to set up across jurisdictions. These constraints have limited alternative investments to institutions and the ultra‑wealthy.

Tokenization – the representation of ownership interests in a digitally native format on distributed‑ledger systems – promises to change that. By issuing fractional interests as cryptographic tokens, sponsors can reduce minimum ticket sizes, enable near‑instant settlement and create secondary‑market liquidity. Policy support is also emerging: regulators in the U.S. and Europe are establishing frameworks for digital securities and stablecoins, while global financial institutions are piloting tokenized funds and collateral networks.

Alternative Investments and the Search for Liquidity

Historically, liquidity has been the primary deterrent to allocating to alternatives. Closed‑end private equity or infrastructure funds lock in investors for multiple years, limiting their ability to rebalance portfolios or meet unexpected cash needs. The emergence of evergreen vehicles and secondary funds has alleviated some pressure, but liquidity events remain episodic.

Tokenization changes this dynamic by enabling fractional ownership and 24/7 peer‑to‑peer trading. The Chartered Alternative Investment Analyst (CAIA) Association notes that tokenization offers fast and cheap transactions, increased liquidity through secondary trading, fractional ownership of large assets and improved transparency and operational efficiency. These attributes could transform how alternative assets are bought and sold, paving the way for liquid markets in private strategies.

State of Asset Tokenization in 2025

Rapid growth and diverse asset classes

Tokenization moved from proof‑of‑concept to meaningful scale in 2024–2025. According to a June 2025 Forbes report, the total market value of tokenized real‑world assets (RWAs) on public blockchains reached nearly $18 billion, up from about $10 billion a year earlier. The same report noted that over 185 crypto tokens representing RWAs had a combined market capitalization of $10.62 billion and that BlackRock’s BUIDL fund held $2.9 billion in tokenized U.S. Treasuries, making it the world’s largest tokenized asset fund. Franklin Templeton’s BENJI fund followed with $776 million and VanEck launched VBILL, a tokenized U.S. Treasury fund in partnership with Securitize.

By August 2025, publicly visible tokenized instruments—treasuries, stablecoins, commodities, funds and credit—exceeded $26 billion, with regulated funds and fixed‑income tokens growing fastest. A Q3 2025 market report indicated that the broader RWA tokenization market crossed $30 billion, a ten‑fold increase from the $2.9 billion total in 2022. Private credit was the largest segment (~$17 billion), followed by U.S. Treasuries (~$7.3 billion), while commodities and institutional alternative funds (including tokenized money‑market funds) each accounted for roughly $2 billion.

Forecasts to 2033 and beyond

Analysts expect exponential growth over the next decade. A 2025 report by Boston Consulting Group (BCG) and Ripple projected that the tokenized asset market could surge from about $0.6 trillion today to $18.9 trillion by 2033, with a range spanning $12.5–23.4 trillion. Deloitte’s financial‑services predictions anticipate that up to $4 trillion of real estate could be tokenized by 2035, rising from less than $0.3 trillion in 2024 and implying a 27 % compound annual growth rate (CAGR). Within that total, Deloitte expects tokenized private real‑estate funds to reach $1 trillion, the tokenized ownership of loans and securitizations $2.39 trillion, and undeveloped land and under‑construction projects $50 billion. Together, these forecasts suggest that tokenization could transform not only equity and credit but also the financing of infrastructure, development projects and securitized debt.

Market leaders and institutional adoption

Major asset managers and banks are driving the early waves of issuance. BlackRock’s BUIDL fund, which provides on‑chain exposure to U.S. Treasury bills, vaulted to $2.9 billion in assets. Franklin Templeton’s BENJI on the Stellar blockchain had $776 million. VanEck’s VBILL and ONDO Finance’s tokens further expanded the universe of tokenized cash‑management products. In private markets, Hamilton Lane partnered with Securitize to launch a tokenized feeder fund for its flagship secondaries strategy, lowering the minimum investment from $5 million to $20,000. Kin Capital announced plans to launch a $100 million tokenized real‑estate debt fund on the Chintai blockchain with a $50,000 minimum for qualified institutional investors.

Banks and market infrastructure providers are also entering the space. J.P. Morgan’s Onyx platform has moved from pilots to live production, enabling institutional clients to pledge tokenized money‑market fund shares as collateral through its Tokenized Collateral Network. Canton Network, backed by Goldman Sachs, BNP Paribas and DTCC, reportedly processes over $4 trillion in tokenized transactions, including $2 trillion per month in tokenized Treasury repo flows. These initiatives suggest that the plumbing of capital markets is quietly going on‑chain.

Benefits of Tokenizing Alternative Assets

1. Fractional ownership and broader access. Tokenization allows sponsors to issue micro‑slices of funds or assets, enabling minimum subscriptions as low as a few hundred dollars. This stands in stark contrast to traditional private funds, where minimums can be millions. Fractionalization thus expands the investor base to include affluent individuals and mass‑affluent investors, a key requirement for democratizing alternatives. Hamilton Lane’s feeder fund example demonstrates how tokenization can lower minimums from $5 million to $20,000.
2. Liquidity via secondary markets. Digital tokens can be traded peer‑to‑peer 24/7 on compliant marketplaces, providing liquidity to previously locked‑up capital. CAIA notes that tokenization makes assets more liquid by enabling secondary market transactions and fast and cheap settlements. Liquid secondary markets also provide price discovery, improving transparency for both sponsors and investors.
3. Operational efficiency and transparency. Issuing and servicing securities on a blockchain reduces the need for multiple intermediaries, potentially lowering administration costs and settlement times. Immutable on‑chain records provide real‑time auditability, reducing reconciliation errors. Deloitte reports that blockchain‑based securitizations have cut loan‑level reporting times from 55 days to 30 minutes, while Figure Technologies estimates cost savings of about US$850 per US$100,000 mortgage when issuing blockchain‑based home‑equity loans.
4. Access to global capital and programmable compliance. By issuing a single global‑ISIN exchange‑traded note (ETN) or tokenized share, managers can distribute a strategy across multiple jurisdictions without creating separate local feeders. The Q&A document produced for LYNK Markets argues that ETNs offer faster time‑to‑market and lower costs compared with feeder funds and separate managed accounts. Programmatic compliance features baked into smart contracts (e.g., KYC/AML filters and transfer restrictions) further reduce manual back‑office work and improve regulatory adherence.

Case Studies and Real‑World Applications

Hamilton Lane’s tokenized feeder fund. In one of the earliest demonstrations of tokenization’s power to democratize private equity, Hamilton Lane and Securitize tokenized a feeder vehicle for the Hamilton Lane Secondary Fund VI. The digital shares slashed the minimum investment from $5 million to $20,000, proving that fractional ownership can broaden access to an asset class previously reserved for institutions. Subscriptions and redemptions were settled using USD Coin (USDC), illustrating how stablecoins can streamline fund administration.

BlackRock and Franklin Templeton. BlackRock’s BUIDL fund, launched in March 2024 on the Ethereum blockchain, tokenizes an institutional money‑market fund backed by U.S. Treasuries. By June 2025 it held $2.9 billion, making it the largest tokenized fund. Franklin Templeton’s BENJI and VanEck’s VBILL offer similar exposure, with assets of $776 million and undisclosed levels, respectively. These products provide investors with 24/7 settlement and the ability to use fund shares as collateral in digital lending and repo transactions.

Kin Capital and real estate debt. Deloitte reports that Kin Capital plans to launch a US$100 million real‑estate debt fund on the Chintai blockchain with a $50,000 minimum for qualified institutional investors. This is among the first tokenized real‑estate trust deeds, and its issuance will test market appetite for tokenized private debt.

Canton Network and Onyx. The Canton Network, supported by Goldman Sachs, BNP Paribas and DTCC, processes over $4 trillion of tokenized transactions, including $2 trillion in tokenized Treasury repo flows each month. J.P. Morgan’s Onyx platform enables tokenized money‑market fund shares to be pledged as collateral in the bank’s settlement network. These initiatives show that large global institutions are integrating tokenized assets into their core operations.

Challenges and Risks

While tokenization unlocks new opportunities, it also introduces risks that asset managers and wealth advisers must consider:

Regulatory uncertainty and fragmentation. Regulatory regimes differ across jurisdictions. In the U.S., the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act—signed into law in July 2025—creates a regulatory framework for payment stablecoins and clarifies that permitted payment stablecoins are neither securities nor commodities. Only permitted issuers (subsidiaries of insured depository institutions or federally licensed nonbank issuers) may issue such stablecoins, and they must maintain one‑to‑one reserves. The act prohibits unlicensed stablecoin issuance and takes effect 18 months after enactment or 120 days after regulators finalize rules. In Europe, the Markets in Crypto‑Assets (MiCA) regulation became fully applicable in December 2024, setting standards for stablecoins and crypto‑asset service providers. The UK Digital Securities Sandbox and Singapore’s Project Guardian provide regulated environments for tokenized securities. Navigating these evolving rules requires specialist legal and compliance expertise.

Liquidity and market depth. Tokenized assets remain a small portion of the alternative universe. Global money‑market funds hold around $10 trillion, whereas assets under management in tokenized funds are “just a few billion dollars”. With limited secondary‑market depth, tokenized securities may be subject to higher volatility or discounts when investors seek liquidity. Composability across blockchains also remains nascent, raising the risk of fragmented liquidity.

Technological risks and custody. Smart contracts can contain bugs, and off‑chain data feeds may be manipulated if not properly secured. The storage of private keys introduces operational risks, particularly for wealth clients unfamiliar with self‑custody. While regulated custodians and transfer agents are emerging, they must prove that they can handle tokenized assets at scale.

Investor education and perception. Many investors equate digital assets with speculative cryptocurrencies. Education is needed to explain that tokenized funds are simply existing regulated products in a new wrapper. Without clear messaging, tokenization may be perceived as marketing rather than substance. Advisors must also ensure clients understand liquidity constraints, redemption procedures and potential regulatory differences across jurisdictions.

Implications for Asset Managers

Expand distribution and investor base. By issuing tokenized feeder funds, ETNs or on‑chain shares, asset managers can tap new pools of capital globally. They can serve high‑net‑worth individuals and the mass affluent without setting up multiple feeder funds or SMAs. Tokenization reduces administrative overhead and simplifies cross‑border distribution through a single global security. This is particularly attractive to boutique managers seeking scale without incurring the legal and operational burdens of local fund domiciles.

Innovate product structures. Managers can create semi‑liquid or evergreen structures that offer periodic liquidity through programmable gates or automated redemption queues. They can also design strategies tailored to investor preferences—such as ESG‑weighted private credit portfolios or infrastructure funds with built‑in carbon‑credit allocations—by embedding selection criteria into smart contracts. The ability to code capital calls, distributions and compliance checks reduces back‑office workload and enhances investor transparency.

Leverage new financing channels. On‑chain collateral networks enable funds to obtain financing or provide liquidity to investors without off‑chain settlement delays. Managers can lend tokenized fund shares or accept them as collateral in repo and derivatives transactions, thereby enhancing fund economics and investor returns. Partnerships with banks and digital‑asset custodians will be critical to unlocking these capabilities.

Implications for Wealth Managers

Broaden client offerings. Wealth managers can offer access to institutional strategies at significantly lower minimums, addressing client demand for diversification. Tokenized products such as BlackRock’s BUIDL or Hamilton Lane’s feeder fund allow advisors to provide exposure to high‑quality credit and private equity with on‑chain settlement and 24/7 availability.

Enhance operational efficiency. Automated compliance checks, on‑chain recordkeeping and programmable transfers reduce manual processes and operational risk. Advisors can use digital dashboards to view client positions in real time, execute subscriptions or redemptions instantly and maintain accurate KYC/AML records.

Educate and manage expectations. Advisors must guide clients through the nuances of tokenized alternatives, including understanding the underlying asset, redemption terms and the role of stablecoins in settlement. They should emphasise that while tokenization can improve liquidity, these products are not as liquid as public equities and may still be subject to lock‑ups or redemption notice periods. Clear communication and due diligence are essential for building trust.

The Outlook: Toward a Trillion‑Dollar Market

Despite current limitations, the momentum behind tokenization is building. BCG and Ripple’s forecast that the tokenized asset market could reach $18.9 trillion by 2033 underscores the scale of the opportunity. Deloitte’s projections of $4 trillion in tokenized real estate by 2035 highlight the potential for specific asset classes. Meanwhile, the GENIUS Act’s establishment of a federal stablecoin framework and the European Union’s MiCA regime provide regulatory clarity that should encourage more issuers to experiment with on‑chain products. As institutional adoption grows, liquidity pools deepen and interoperability improves, tokenization will likely become a standard tool for structuring and distributing alternative investments.

Conclusion

The tokenization of alternative assets marks one of the most significant structural shifts in capital markets since the advent of exchange‑traded funds. It combines the operational benefits of blockchain technology with the rigor of regulated fund structures. Asset managers and wealth advisers who embrace this innovation early can expand their distribution, improve efficiency and meet growing client demand for alternatives. Yet success will depend on navigating regulatory complexity, ensuring robust custody and maintaining investor education and trust. As frameworks like the GENIUS Act and MiCA mature and as institutional pilots scale, tokenized alternatives are poised to unlock liquidity and access for a broader set of investors.

Key Takeaways

Explosive growth: The total value of tokenized real‑world assets increased from about $10 billion in 2024 to nearly $18 billion by early 2025 and surpassed $24 billion across 194 issuers later that year. By Q3 2025, the market exceeded $30 billion, a ten‑fold rise since 2022.

Institutional leadership: Major managers like BlackRock, Franklin Templeton and Hamilton Lane are issuing tokenized funds. BlackRock’s BUIDL fund reached $2.9 billion. while Franklin Templeton’s BENJI held $776 million. Hamilton Lane’s tokenized feeder fund reduced minimums from $5 million to $20,000.

Diverse asset classes: Tokenization now spans U.S. Treasuries (~$7.3 billion), private credit (~$17 billion) and commodities and institutional alternative funds (about $2 billion each). Deloitte projects $4 trillion in tokenized real estate by 2035.

Benefits and efficiencies: Fractional ownership enables broader access, secondary trading improves liquidity and smart contracts reduce settlement times and operational costs. Tokenized securitizations have reduced loan reporting times from 55 days to 30 minutes.

Regulation is critical: The GENIUS Act (U.S.) and MiCA (EU) establish rules for stablecoins and digital assets. Navigating evolving regulations, ensuring robust custody and educating investors will be paramount for asset managers and advisors adopting tokenized alternatives.