Fund tokenization is spreading across venture capital, private credit, Treasury portfolios, and mutual funds. For asset managers and blockchain businesses, the opportunity is to change how investors access, hold, and transfer fund interests. The essential product decision is what those tokens legally represent.

ARK Invest’s September 2026 announcement with Securitize illustrates the movement into registered alternatives. Its planned Ethereum offering follows an SEC order accommodating tokenized and exchange-listed share classes. Other managers have already introduced tokenized money market funds, options strategies, and private fund feeders.

These products share technology but differ in investor eligibility, legal protections, fees, and exit rights. Understanding those differences is the starting point for designing a tokenized investment fund.

What is a tokenized investment fund

A tokenized fund uses blockchain technology to record or represent ownership interests in an investment vehicle. Depending on the structure, the investor may own a direct fund share or an interest in a separate feeder that invests in another fund.

Tokenizing a share does not necessarily tokenize the assets inside the portfolio. A fund can hold conventional Treasury securities, loans, or company shares while using blockchain infrastructure for shareholder records and transfers. Similarly, investing in cryptocurrency and issuing tokenized shares are separate decisions.

The term “registered alternative funds” also requires care. It includes registered closed-end funds, such as interval and tender offer funds, and alternative mutual funds. The broader publicly registered alternatives market includes BDCs and non-traded REITs, whose regulatory structures differ. BDCs elect a special Investment Company Act of 1940 regime; many REITs operate outside investment-company registration. A filing with the SEC does not make every vehicle a registered 40 Act fund.

Direct fund shares and tokenized feeders

With direct tokenized shares, the investor holds an interest in the fund itself. ARK’s proposed tokenized class and Franklin Templeton’s BENJI fund illustrate this approach. Tokenization does not always create a separate share class; it can instead be the recordkeeping format for a fund’s shares.

A tokenized feeder adds another entity. Apollo Diversified Credit Securitize Fund, or ACRED, invests substantially all its assets in Apollo Diversified Credit Fund. Buying ACRED therefore provides exposure through the feeder, rather than direct ownership of a tokenized share class of the underlying interval fund.

Product teams should identify the issuer, shareholder rights, eligibility tests, fee layers, and withdrawal terms at each level. Registration of an underlying fund does not automatically make a feeder a registered retail product.

Examples of tokenized funds and share offerings

The examples below distinguish direct tokenized shares from feeder interests. Dates identify launches or announcements, not a comprehensive statement of current availability. Eligibility and network support vary by product.

Fund and introduction	Legal structure	Investment exposure	Tokenization model
ARK Venture FundARKVX · 2026 announcement	Registered interval fund; tokenized class permitted by amended SEC order	Venture and public equities	Ethereum / Securitize. Announcement is distinct from evidence of active trading.
Arca U.S. Treasury FundArCoin · 2020 launch	Registered interval fund; direct digital shares	U.S. Treasuries and cash	Ethereum / Securitize. ATS trading available; prospectus describes limited liquidity.
Franklin OnChain U.S. Government Money FundFOBXX / BENJI · 2021	Registered money market mutual fund; direct tokenized shares	Government securities and cash instruments	Launched on Stellar using Franklin’s Benji infrastructure; approved shareholder transfers.
WisdomTree Equity Premium Income Digital FundWTPIX / EPXC · Dec 2025	Registered mutual fund; direct digital shares	Cash-secured equity index ETF put-writing	WisdomTree Prime and Connect. An alternative strategy delivered as a tokenized mutual fund.
BlackRock USD Institutional Digital Liquidity FundBUIDL · March 2024	Private fund relying on Section 3(c)(7); direct tokenized shares	Cash, Treasury bills, and repos	Launched on Ethereum / Securitize; transfers between approved investors.
Apollo Diversified Credit Securitize FundACRED · January 2025	Separate tokenized feeder into Apollo Diversified Credit Fund	Public and private credit exposure	Securitize; launched across six networks, including Ethereum and Solana.
Hamilton Lane Equity Opportunities Fund V accessJanuary 2023	Separate Securitize tokenized feeder into a private equity fund	Private equity	Launched on Polygon. Investors hold feeder interests.

Direct share offerings and feeder funds are intentionally identified separately.

What the ARK SEC order means for other managers

ARK’s September 21, 2026 order amended earlier multiclass relief to permit exchange-listed and tokenized classes alongside conventional shares. Its application argued that blockchain recordkeeping alone did not require an exemption. The prior application’s restriction on listing and quotation needed to change.

The conditions address matters that affect product design: approved wallets with customer identification checks, public NAV disclosure, warnings about premiums and discounts, and allocation of class-specific expenses. The order also covers certain qualifying future ARK-advised funds, including tender offer structures. An unrelated manager cannot simply rely on ARK’s order.

Sponsors should therefore evaluate their own registration statements, existing orders, distribution arrangements, and proposed trading mechanisms. The appropriate regulatory analysis depends on the intended features, not merely the decision to use Ethereum or another blockchain.

How the SEC Innovation Exemption relates to tokenized funds

On September 17, 2026, the SEC issued its Innovation Exemption, granting temporary, conditional relief to certain tokenized securities venues and liquidity providers under the Securities Exchange Act of 1934. The five-year framework facilitates secondary trading of tokenized National Market System (NMS) stocks through permissioned automated market makers and liquidity pools. It does not permit primary issuance on those venues.

The connection to funds is concrete: tokenized money market funds may serve as trading-pair assets directly alongside tokenized NMS stocks. This creates a potential use for fund shares within blockchain trading infrastructure. However, the NMS-stock scope does not automatically encompass unlisted interval funds, tender offer funds, or private fund interests.

The order expressly provides no Investment Company Act exemption and flags multiclass and mutual fund pricing issues. ARK’s fund-specific relief therefore addresses a separate regulatory layer. Product teams must evaluate both the fund structure and the trading arrangement. Permission to operate a venue also does not ensure sufficient capital, willing counterparties, or trading near NAV—the distinction between trading access and meaningful liquidity remains essential.

Why tokenization does not guarantee liquidity

Fund liquidity has three separate components: the liquidity of portfolio assets, the fund’s redemption or repurchase obligations, and the ability to sell shares to another investor. Tokenization can improve transfer mechanics without improving all three.

Arca provides a concrete example. Its digital shares can trade on Securitize Markets, yet its prospectus describes a limited and relatively illiquid market. Blockchain settlement does not supply willing buyers.

Money market funds offer a different use case. Their portfolios and redemption arrangements can support cash-management functions that are harder to reproduce with private assets. Even then, secondary liquidity needs capital behind it. WisdomTree’s announced 24/7 model for its Treasury Money Market Digital Fund uses a broker-dealer trading from inventory, subject to balance-sheet capacity. The fund itself does not become an unlimited around-the-clock redemption facility.

For alternatives, a functioning secondary market could let one investor exit while another supplies capital. Sponsors should measure executed volume, bid depth, spreads, and discounts rather than infer liquidity from token transfers or platform availability.

Building the business case for fund tokenization

Asset managers should connect the technology to an identifiable investor need. A tokenized Treasury fund might serve institutional cash management. A registered alternative fund might reach investors who prefer digital wallets or simplify transfers among approved holders. Those use cases require different distribution partners and service standards.

Blockchain businesses entering fund management need an operating model that covers investment management, valuation, administration, custody, compliance, governance, and investor reporting. Registration and offering obligations remain relevant even when subscriptions and shareholder records use digital interfaces.

Four design decisions deserve attention before launch:

Choose the legal claim. Decide whether investors will hold direct shares, a distinct share class, or feeder interests. Map voting, distributions, fees, tax reporting, and exit rights to the correct entity.

Define the authoritative record. Establish how the transfer agent and blockchain reconcile, which record governs ownership, and how lost keys or erroneous transfers are handled. Arca’s prospectus, for example, identifies the transfer agent’s records as controlling.

Separate payment from share issuance. Specify how fiat and any supported stablecoin payments become cleared subscription proceeds, when shares are issued, and how investors receive withdrawals. A blockchain token and a stablecoin payment option are separate product features.

Budget for adoption and liquidity. Include onboarding, technology, servicing, custody, distribution, and any intermediary liquidity commitments. Lower minimums and faster transfers only create commercial value if investors want the strategy and intermediaries can support it.

The opportunity for registered alternatives

The strongest case for tokenized registered alternative funds combines a useful investment strategy with a distribution and ownership experience that investors prefer. Treasury funds demonstrate applications for moving and holding cash-like investments. Alternative strategies introduce different valuation, eligibility, and liquidity requirements.

For sponsors, the objective should be a product whose legal rights, operating systems, and investor expectations agree. Tokenization can improve delivery, but the quality of the fund structure and the credibility of its liquidity arrangements will determine whether investors stay.