The Private Markets
Tokenization Journey
June 2026
A growing number of the world’s largest private funds managers are cautiously exploring the power of tokenization.
For tokenization supporters, the potential advantages are clear, chief among them the ability to use distributed ledger technology to transform cumbersome, manual, onboarding processes into a more efficient digital experience.
The use of smart contracts can automate certain aspects of KYC and AML, allowing for ‘onboarding by design’, while investor accreditation requirements, jurisdiction restrictions, and holding periods can be programmed directly into the token, ensuring only compliant investors can receive or trade assets. Leveraging blockchain also has the potential to make transfers of certain types of fund interests less unwieldy. In addition, tokenization can allow investors to obtain financing for their tokens via decentralized finance, or DeFi, platforms.
A recent survey suggests that 11% of private market participants are actively considering tokenization of secondary investor interests within the next 12 months1.
Expected Demand for Tokenized Private Assets
Crucially, tokenization may also have a role to play in accelerating the democratization of private markets, by enhancing liquidity, reducing costs, and appealing to a new breed of crypto-savvy investor. However, tokenization does not remove the legal limits on access. Indeed, legal and regulatory challenges are among the most significant obstacles to enhanced adoption.
Projected Demand for Tokenized Private Assets (2025)
Source: Broadridge 2025 Tokenization Survey
Expected Demand for Tokenized Private Assets
Crucially, tokenization may also have a role to play in accelerating the democratization of private markets, by enhancing liquidity, reducing costs, and appealing to a new breed of crypto-savvy investor. However, tokenization does not remove the legal limits on access. Indeed, legal and regulatory challenges are among the most significant obstacles to enhanced adoption.
Projected Demand for Tokenized Private Assets (2025)
Source: Broadridge 2025 Tokenization Survey
Obstacles to Adoption
There are a number of perceived challenges that are slowing the adoption of tokenization in private markets. These include questions about the commercial law and regulatory treatment of the token itself, as well as concerns that requirements applicable to digital assets and tokenized interests are fragmented across jurisdictions and legal frameworks. In fact, 73% of financial institutions surveyed in 2025 identified unclear regulation as the top challenge concerning tokenization, which reflects the varying and often contradictory rules for digital assets and securities across jurisdictions2.
There are also concerns regarding on-chain tokens’ compliance with KYC and AML requirements, as well as implications concerning tax and reporting rules.
In addition to regulatory challenges, there are also operational and technical obstacles including integration with legacy infrastructure and cybersecurity risks. These are likely some of the biggest hurdles to widespread adoption as both sponsors and investors would need to be willing and able to develop processes, protocols, and structures to use and custody tokenized assets.
Furthermore, the fragmentation of the blockchain landscape, with so many different, non-interoperable platforms, makes it difficult to achieve seamless market-wide adoption.
Obstacles to Adoption
There are a number of perceived challenges that are slowing the adoption of tokenization in private markets. These include questions about the commercial law and regulatory treatment of the token itself, as well as concerns that requirements applicable to digital assets and tokenized interests are fragmented across jurisdictions and legal frameworks. In fact, 73% of financial institutions surveyed in 2025 identified unclear regulation as the top challenge concerning tokenization, which reflects the varying and often contradictory rules for digital assets and securities across jurisdictions2.
There are also concerns regarding on-chain tokens’ compliance with KYC and AML requirements, as well as implications concerning tax and reporting rules.
In addition to regulatory challenges, there are also operational and technical obstacles including integration with legacy infrastructure and cybersecurity risks. These are likely some of the biggest hurdles to widespread adoption as both sponsors and investors would need to be willing and able to develop processes, protocols, and structures to use and custody tokenized assets.
Furthermore, the fragmentation of the blockchain landscape, with so many different, non-interoperable platforms, makes it difficult to achieve seamless market-wide adoption.
Overcoming Concerns
While these concerns are valid, if viewed primarily as a record keeping methodology – a distributed ledger, as opposed to a centralized ledger, for recording ownership – tokenization is really just a means of applying new technology to traditional processes. Therefore, if the relevant documentation clearly describes the function of the tokenization, the arrangement can be structured in a way to limit any material new tax, legal or regulatory considerations for the issuer when structuring a fund.
Equally, in the context of secondaries trades, when viewed primarily as a means of reducing certain administrative friction, rather than opening the floodgates to mass transferability, many perceived concerns around the impact of tokenization can be alleviated.
With respect to operational challenges, meanwhile, most early adopters are rolling out tokenization via feeder funds, engaging with tokenization counterparties in much the same way that they have set up feeder funds with other high-net-worth distribution channels.
In this sense, tokenization simply offers another access point for an increasingly important investor group. However, it is worth noting that this incremental approach, while prudent, does not yet capture the full range of efficiencies and liquidity benefits that tokenization may ultimately deliver as the ecosystem matures.
Equally, in the context of secondaries trades, when viewed primarily as a means of reducing certain administrative friction, rather than opening the floodgates to mass transferability, many perceived concerns around the impact of tokenization can be alleviated.
With respect to operational challenges, meanwhile, most early adopters are rolling out tokenization via feeder funds, engaging with tokenization counterparties in much the same way that they have set up feeder funds with other high-net-worth distribution channels.
In this sense, tokenization simply offers another access point for an increasingly important investor group. However, it is worth noting that this incremental approach, while prudent, does not yet capture the full range of efficiencies and liquidity benefits that tokenization may ultimately deliver as the ecosystem matures.
Early Movers
Taking this approach, several of the world’s biggest private funds platforms have embarked on a tokenization journey.
Partners Group was among the earlier movers. In 2021, Partners Group worked with digital securities exchange ADDX to tokenize an allocation from its flagship E5.5 billion Global Value SICAV Fund3. The initiative allowed accredited investors to access the vehicle at a minimum ticket size of $10,000.
Hamilton Lane, meanwhile, has launched several tokenized feeder funds4, KKR has tokenized a portion of its Health Care Strategic Growth Fund II5, and Apollo has tokenized private credit on multiple blockchain networks6. These are just a few of the firms to have experimented with the technology.
Early Movers
Taking this approach, several of the world’s biggest private funds platforms have embarked on a tokenization journey.
Partners Group was among the earlier movers. In 2021, Partners Group worked with digital securities exchange ADDX to tokenize an allocation from its flagship E5.5 billion Global Value SICAV Fund3. The initiative allowed accredited investors to access the vehicle at a minimum ticket size of $10,000.
Hamilton Lane, meanwhile, has launched several tokenized feeder funds4, KKR has tokenized a portion of its Health Care Strategic Growth Fund II5, and Apollo has tokenized private credit on multiple blockchain networks6. These are just a few of the firms to have experimented with the technology.
Early Movers for Tokenization
in Recent Years
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Early Movers for Tokenization in Recent Years
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The Future
Private funds’ foray into tokenization remains limited to date, but the potential impact could be significant, particularly in the context of the rapid democratization of private markets.
High-net-worth individuals plan to allocate an average of 8.6% of their portfolios to tokenized assets by the end of 2026, according to EY-Parthenon7.
There is no suggestion that there will be a mass migration to tokenization. Many institutional investors have no interest in pursuing a tokenization path, for example. However, it seems inevitable that the largest sponsors will increasingly add tokenization to their ever-growing menu of options, as they continue to woo the $86.8 trillion high-net-worth market8.
Percentage of Portfolios
Investors Plan to Allocate to Tokenized Assets
Source: EY-Parthenon
The Future
Private funds’ foray into tokenization remains limited to date, but the potential impact could be significant, particularly in the context of the rapid democratization of private markets.
Percentage of Portfolios
Investors Plan to Allocate to Tokenized Assets
Source: EY-Parthenon
High-net-worth individuals plan to allocate an average of 8.6% of their portfolios to tokenized assets by the end of 2026, according to EY-Parthenon7.
There is no suggestion that there will be a mass migration to tokenization. Many institutional investors have no interest in pursuing a tokenization path, for example. However, it seems inevitable that the largest sponsors will increasingly add tokenization to their ever-growing menu of options, as they continue to woo the $86.8 trillion high-net-worth market8.
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