Access to private markets has traditionally been exclusive to large institutional investors , leaving retail investors on the sidelines . Assets such as real estate, private debt or venture capital offer attractive opportunities, but their barriers to entry, such as high minimum amounts and lack of liquidity, make them inaccessible to many. However, asset tokenization has emerged as a potential solution .
Tokenisation uses blockchain technology to divide asset ownership into small, tradable fractions, known as “tokens”. This allows retail investors to access private markets with lower minimum investments, while also improving liquidity, transparency and operational efficiency. Asset managers such as BlackRock , Franklin Templeton and Abrdn are already exploring tokenisation in products such as money market funds and real estate. Although we are in the early stages, the potential for change in investment is significant.
Advantages of tokenization for investors
Tokenization democratizes access to private markets . Traditionally, high minimum investment amounts were a barrier for individual investors. With tokenization, assets are divided into small tradable tokens, allowing even small investors to participate in large projects, such as real estate developments or private equity financing for startups .
This fractionation also provides greater liquidity. Previously, investors had to wait long periods to liquidate their investments. Now, thanks to tokenization, assets can be traded on digital platforms more quickly, facilitating the sale of tokens on secondary markets and reducing the risk associated with the lack of immediate access to the invested capital.
Furthermore, by eliminating intermediaries and automating processes with blockchain , operational costs decrease . Blockchain technology provides a public and immutable record of all transactions, increasing transparency in operations, something that was previously not possible in private markets.
Practical applications of tokenization in private markets
Beyond the theoretical benefits, tokenization has concrete applications that are already revolutionizing access to private markets. For example, an investor interested in commercial real estate, which previously required a high minimum investment, can now acquire a fraction of the project at a much lower cost. This opens up opportunities for diversification without committing large sums of capital .
In private debt, a corporate loan can be divided into tokens accessible to different investors , who will receive interest payments proportional to their participation. This not only facilitates access, but also creates a more dynamic and liquid market for this type of debt, previously reserved for institutional investors.
In the private equity sector, tokenization allows small investors to participate in startup financing , which was previously the exclusive domain of large venture capital funds. This attracts a new group of investors interested in diversifying their portfolios, while entrepreneurs benefit from broader access to capital.
BlackRock, Franklin Templeton and Abrdn, pioneers in asset tokenization
Several large asset managers have already begun exploring the possibilities of tokenization. BlackRock, the largest asset manager, launched the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) on the Ethereum blockchain . This fund allows institutional investors to buy and sell shares using tokens, improving liquidity and reducing settlement times.
Franklin Templeton has also tokenized its Franklin OnChain US Government Money Fund , using the public Ethereum blockchain to allow retail investors to purchase tokenized shares. This initiative offers real-time transfers, increased liquidity, and interaction with other digital assets such as stablecoins. Users of this platform are already experiencing faster transactions and reduced costs.
Abrdn has begun tokenizing its private asset funds, allowing investors to fractionalize their stake. This reduces entry costs and improves transparency in the operation of the funds, facilitating access to retail investors who were previously unable to access these products.
A promising future for asset tokenization
As blockchain technology matures and regulatory challenges are resolved, tokenization is likely to become a standard in asset management . This will offer retail investors a wider range of opportunities, changing the way we understand and access private markets. The ability to invest in fractions of large assets, transparently and with lower barriers, marks the beginning of a new era in financial investment.
