Flow Capital Partners is advancing plans to place its $150 million private credit fund onchain, marking a notable step in the firm’s expansion strategy. The asset manager of Hong Kong, plans to issue tokenized shares on DigiFT, a tokenization-based platform in the real world. According to a report by Bloomberg, the deployment might occur by the end of April as the company ramps up its blockchain integration initiative.
In addition, Flow Capital will target to issue more tokenized shares of up to $30 million by the end of the year. This fundraising initiative helps increase the target to expand the fund to $250 million by 2026. Jacky Tian, the chief investment officer of the firm, affirmed the expansion plans because interest in tokenized assets is growing among institutional markets.
Moreover, the onchain decision to transfer fund shares is indicative of a broader industry trend, namely distribution models based on blockchain. Asset managers are getting interested in effective means to access global investors and minimize the conventional friction. The concept of tokenization can enable companies such as Flow Capital to expand access to and potentially enhance settlement operations in the private markets.
Tokenization Push Expands Across Institutional Finance
In the meantime, a number of international financial institutions have already launched the tokenization sector with like programs. BlackRock introduced its tokenized Treasury fund, BUIDL, which has been spreading in blockchain networks. In December, JPMorgan also launched its tokenized money-market fund, MONY, on Ethereum, and initially seeded it with $100 million, before opening it to other investors.
The following developments evidence that traditional finance is still investigating blockchain as a potential infrastructure layer. As a result, the real world asset market has been experiencing a booming growth in the last one year. According to market data, total RWA capitalization was $58 billion in mid-April, soaring up compared to $21.5 billion one year prior.
RWA market increased to $19.3 billion on Ethereum alone, indicating a robust year-over-year growth. This spurt underscores the growing investor enthusiasm into blockchain-based exposure to traditional financial instruments.
Liquidity Concerns Shadow Tokenized Private Credit Growth
Nic Puckrin, a co-founder of Coin Bureau, stated that tokenization will enhance access but not liquidity mismatches. The speed with which one can trade, he says, can give a false appearance of liquidity to markets that are essentially illiquid.
He also noted that these risks might be revealed by the pressure of redemption when the demand by investors surpasses the liquidity. Thus, tokenization can be more distribution-enhancing, but not the elimination of underlying financial limitations within private credit arrangements.
The move by Flow Capital is an indicator of increased momentum towards the use of blockchain in conventional finance. Nevertheless, the issue of accessibility and risk management is still very important as the tokenized markets keep developing.