The global asset management industry is facing a structural evolution.
While the fundamental investment fund model has survived market cycles for over a century, the plumbing beneath it remains operationally heavy and fragmented. Settlement cycles are measured in days, and transfer agency processes rely on outdated technology
This expanding gap between modern investor expectations and legacy systems has triggered a race for relevance, positioning tokenisation as the premier growth story for next-generation distribution.
As outlined in the report “The frictionless fund“, supported by Calastone, the immediate and most practical entry point into digital assets is tokenised distribution.
However, rather than attempting to digitalize the entire asset management value chain or overhaul core fund manufacturing overnight, forward-thinking asset managers are choosing a pragmatic approach: tokenising only the fund unit while leaving the underlying fund structure, administration, and servicing intact.
This creates a powerful hybrid phase that allows traditional finance (TradFi) to interface directly with decentralized finance (DeFi).
The commercial necessity for this upgrade is massive. Calastone’s research projects that tokenised fund assets under management (AUM) will skyrocket from $4 billion in 2024 to $235 billion by 2029 – a 58-fold increase. Immediate action is already evident among industry leaders; for example, Legal & General has made £50 billion in liquidity fund assets available via tokenised distribution channels.
This on-chain distribution bridge is primarily driven by a maturing DeFi ecosystem in search of sophisticated treasury management tools. Massive digital-native entities now hold immense cash reserves. For instance, Tether, the largest stablecoin issuer, holds $127 billion in US Treasury bills, making it a larger buyer than sovereign countries like Norway, Taiwan, or Canada. Despite their decentralised ethos, 75% of DeFi platforms are forced to park their cash via traditional intermediaries like conventional money market funds (MMFs) or bank deposits, undermining their speed, transparency, and liquidity
Tokenised MMFs solve this paradox. They unite the yield and security of traditional finance with blockchain-native advantages like continuous on-chain settlement, stablecoin compatibility, and direct digital wallet integration. Calastone’s data suggests that 80% of DeFi platforms believe tokenised MMFs could radically optimize their treasury operations, helping them attract new investors and retain existing clients.
Crucially, asset managers are prioritising speed to market over internal tech builds. Research indicates that 70% of managers consider technology partners a “Day 1” priority, preferring to utilise digital fund distribution platforms or digital exchanges rather than establishing direct investor pipelines. To maximise accessibility, a vast majority plan to accept multiple payment rails, including cryptocurrencies, fiat cash, and stablecoins. Ultimately, tokenised distribution offers a scalable acquisition channel that captures modern capital pools without forcing immediate back-office disruption.
To read the report, click here: “The frictionless fund“
