So far, most tokenized products are money-market or Treasury funds with institutional-investor clientele. That will change as more asset managers respond to strong business drivers. There's already evidence for retail demand.
Here, we'll do three things:
- Note the key business drivers for asset managers.
- Apply a transfer-agent's perspective.
- Briefly introduce the Envision Digital Assets Platform.
Before turning to those topics, however, let’s briefly lay out a few tokenized-fund basics:
- With tokenized funds, the blockchain acts as a transparent, tamper-evident ledger, recording every transfer, trade, and distribution in real time.
- Here, “blockchain” typically refers to either Ethereum or another ledger compatible with Ethereum Virtual Machine (EVM) software, which allows for smart contracts.
- These smart contracts can automate complex fund operations such as share issuance, transfers, redemptions, and dividend payments—executing these tasks according to pre-set, regulator-approved rules.
- Transfer agents (TAs) remain the regulated entities entrusted with maintaining official shareholder records, verifying investor eligibility (AML and KYC), enforcing compliance, and managing key corporate actions.
- TAs use a blend of traditional and blockchain tools to ensure that every digital transaction is accurate, legal, and auditable.
1. Key business drivers for asset managers
The following business drivers have already been proven out in the institutional arena, such as with BlackRock’s BUIDL ($2B+ AUM), Fidelity’s FYOXX (underlying token FDIT) ($200M+), and Franklin Templeton’s FOBXX (underlying token BENJI). These and other tokenized funds operate within existing securities law—as securities, not some other undefined entity.
Note, too, that FOBXX is a registered ’40 Act fund—demonstrating a regulatory path to access beyond institutions.
Operational efficiency
- Reduced manual processing errors
- 24 hour trading potential
- Reduced operational costs
- Programmatic distribution of dividends to wallets
- Automated compliance embedded directly in the token
- Potential for automated settlement. (At present, tokens associated with ’40 Act funds, such as BENJI, are settling using cash/ACH in standard mutual-fund practice. The industry is working toward tokens settling automatically by swapping against stable coins such as USDC.)
Enhanced liquidity
- Potential to tokenize alternative and semi-liquid assets
Transparency & auditability
- Real-time verification capabilities
- Immutability + ability to correct processing mistakes
All three drivers combine to meet current investor needs while also broadening asset managers’ appeal to “digital native” investors (i.e., tech-first Gen Z).
2. Transfer agent (TA) perspective
Regulatory foundation
TAs continue to have federal oversight and compliance obligations under Section 17A of Securities Exchange Act
- TAs and broker-dealers will continue as the primary compliance checkpoint for investor onboarding and monitoring (e.g., AML and KYC), with enhanced due diligence for tokenized products
Legal recordkeeper
- TAs continue to serve as official custodians of shareholder records, with blockchain serving as supplemental transparent layer
Legal compliance framework
- Tokenization does not change the legal nature of the underlying asset—all existing securities regulations remain in force
- Tokenized funds must be registered or exempt under applicable laws
- On-chain smart contracts recognized under local contract law—ensure legal enforceability
Enhanced capabilities
- Deploy and manage automated fund operations (via smart contracts) while maintaining override controls for compliance events
- Reconcile on-chain transactions with official legal records, ensuring tokens represent legal title to fund units
- Execute transparent, auditable adjustments, if necessary, through additional blockchain transactions (again, made possible by smart contracts)
- Process distributions and other actions with programmable precision while preserving regulatory oversight
3. The Envision Tokenization Platform
Envision’s tokenization platform works with the major EVM-compatible blockchains. We provide smart contracts for efficient account and transaction mapping.
- Our platform-agnostic approach makes tokenization accessible to any TA or asset manager, regardless of existing technology infrastructure.
- Our system is built around a public blockchain and permissioned tokens (ERC-3643) to authorize intermediaries and handle on-chain both investor qualification and compliance checks/rules.
- We provide an API library for intermediary support.
- We provide tight integration and synchronization with our transfer-agent recordkeeping platform, PowerAgent TA.
- We provide end-to-end support for digitizing mutual funds, including deployment of contracts across multiple networks.
- We provide event streaming (continuous capture and real-time transmission of blockchain events such as token transfer and smart-contract updates) and messaging services (transmission of blockchain-generated events to off-chain applications and services).
- We maintain off-chain databases so clients can run queries.