Private funds pose next test for asset tokenisation

The market for tokenised real-world assets expanded from about $5.8bn in early 2025 to more than $31bn by mid-2026, according to RWA.xyz, with US Treasuries and money market funds accounting for much of the growth. Haymond Rankin, associate director at Cayman Finance, said the next phase will be harder because private equity, real estate and private credit do not share the simple valuation and cash-flow features that made short-dated public debt easier to put on-chain.

BlackRock’s BUIDL fund, with about $2.5bn in assets, is among the best-known tokenised money fund products, Rankin said. He also cited comparable offerings from Fidelity International, JPMorgan and Franklin Templeton as evidence that institutional infrastructure for liquid on-chain assets is now largely established.

Why money funds moved first

Rankin said money market funds were an early target for tokenisation because their assets are relatively easy to value and commercially attractive to holders of digital dollars. These funds typically hold low-risk short-term government debt, mainly US Treasury bills, whose repayment dates and values can be observed from public market data.

That structure allows net asset values to be updated with limited discretion. Tokenised money funds also provide a yield-bearing alternative for stablecoin holders, Rankin said, giving blockchain-based cash exposure to Treasury-level interest while preserving use in trading and settlement.

Private equity requires structural changes

Private equity is more difficult because the standard limited partner and general partner model depends on long holding periods, capital commitments and periodic drawdowns. Rankin said fungible tokens require identical rights and obligations at a given time, while traditional capital calls cause each investor’s funded and unfunded position to diverge.

Skadden’s 2026 analysis of tokenised private fund structures found that commitments behind tokenised interests would probably need to be funded in full at the outset, according to Rankin. That would remove the conventional drawdown model and require changes to fees, recycling provisions and governance rights.

Some large asset managers have already moved into the segment. Rankin said JPMorgan has tokenised a private equity fund for selected private bank clients, while KKR, Apollo and Hamilton Lane have launched tokenised vehicles. Even so, he said tokenised private equity and venture capital funds together hold less than $2bn in assets, against an estimated $11tn in private market assets under management.

Cayman seeks a role in fund tokenisation

Rankin said the Cayman Islands is likely to be an important jurisdiction for tokenised private funds because it hosts more than 31,000 registered investment funds with more than $16tn in total assets. He said legislative changes made in March 2026 excluded tokenised funds from Cayman’s Virtual Asset Service Providers licensing regime, reducing the risk that fund sponsors would need overlapping licences.

A dozen tokenised funds have already been conditionally registered with the Cayman Islands Monetary Authority, according to Rankin.

Real estate and governance remain obstacles

Real estate presents a different challenge. Rankin cited an estimated $393tn global store of value and said tokenisation could automate distributions, reduce reconciliation work and provide faster visibility on net asset value. EY found that 56 per cent of institutional investors ranked real estate as their first or second preferred tokenised alternative, according to Rankin.

The unresolved issue is whether tokenisation can create meaningful secondary-market liquidity. Rankin said trading between eligible investors is technically possible, but depends on investor participation, reliable valuations and legal arrangements for transferring property-related interests.

The operational burden also rises in private markets. Rankin said private equity valuations depend on periodic appraisals, general partner judgment and asset-specific assumptions. The UK Financial Conduct Authority’s April 2026 policy statement on fund tokenisation said managers must retain authority over registers to correct errors and process court decisions, even when public distributed ledgers are used.

Ripple and BCG have forecast that tokenised real-world assets could reach $18.9tn by 2033, while Standard Chartered has projected $30tn by 2034, according to Rankin. He said those projections depend less on money market funds than on whether tokenisation can be adapted to private equity, real estate and private credit.

This story draws on original reporting from Finextra Research.