Tokenised private credit approaches mainstream adoption

Tokenised private credit approaches mainstream adoption

The tokenised private credit market has surged to nearly $14 billion in outstanding loans¹, establishing itself as the dominant force in real-world asset tokenisation. But this isn't just transforming how institutions invest – it's opening doors for individual investors who want to access previously exclusive markets.

The tokenisation revolution and market leadership

Tokenisation has the potential to disrupt asset management. It could transform existing asset lifecycles, accelerate product innovation and create customised, hyper-personalised options for investors². The institutional appetite is undeniable – our research shows that 91% of institutional investors were interested in tokenised products, with 97% agreeing that tokenisation will revolutionise asset management².

This enthusiasm extends beyond research findings. At our recent crypto roundtable in London, serious market participants engaged in forward-looking discussions about crypto trading and tokenisation. The event brought together experienced traders and investors to explore institutional flows, regulatory shifts, and the future of digital assets – reinforcing that tokenisation continues to be a hot topic among sophisticated market participants who understand this evolving space.

Fund managers see significant potential for incorporating tokenisation across alternative assets, with 73% identifying private equity as a prime candidate for tokenisation and 65% identifying hedge funds. Our research found that 93% believed alternative asset classes were more likely to be targeted for tokenisation because of their lack of liquidity, transparency and accessibility².

Representing approximately 65% of the tokenised real-world-assets market, private credit led the sector's growth¹, far outpacing other tokenised asset classes. Figure Technologies stands out as the clear leader with a $10 billion loan book. The private credit market is approaching $1.7 trillion in investment globally, according to Preqin data, yet tokenised private credit has surged to approximately $14 billion³ – highlighting enormous potential for continued growth.

Breaking down traditional barriers and institutional infrastructure

Tokenisation transforms accessibility for everyone. Where traditional private credit funds might require $2 million minimums – effectively excluding most individual investors – tokenised alternatives can offer access for as little as $20,000.

Blockchain protocols also offer significant cost advantages, with rates averaging below 10% compared to traditional counterparts that hover in the double-digit range. This cost efficiency is mainly attributable to digital ledgers' inherent transparency and efficiency⁴. Overall, tokenisation could achieve cost savings of 35% to 65% along the entire value chain by automating processes, reducing intermediaries and streamlining settlement procedures².

Major institutions are leading the way. Hamilton Lane tokenised its Senior Credit Opportunities (SCOPE) private credit fund in 2023, which has since expanded to multiple blockchain platforms including Solana and received a "Recommended" rating from Zenith Investment Partners⁵. SCOPE now manages approximately $12.1 billion AUD across Hamilton Lane's broader Evergreen Platform and offers monthly liquidity options through tokenised feeder funds⁵. When major financial institutions bring their sophisticated infrastructure to tokenised platforms, it creates safer opportunities for individual investors.

Market evolution, performance and the regulatory landscape

The composition of active outstanding loans made on-chain has changed greatly since the market tumbled from a peak near $1.5 billion in 2022. New growth has predominantly come from real world lending financed through the Centrifuge protocol. The decentralised lending protocol had $289 million of active loans outstanding as of July 26, 2024, focused on consumer asset-backed securities (ABS), real-estate bridging loans, and trade finance⁶.

The risk profile is encouraging: only $69 million has fallen into default, representing 1.5% of the $4.5 billion total loan value⁴ – suggesting solid underlying credit quality for all investor types.

Some jurisdictions have updated legal frameworks to explicitly address digital securities, such as Switzerland and Luxembourg. In other markets, legal and regulatory uncertainty will hold back investor and originator interest⁶. The regulatory landscape varies significantly – Japan leads in Asia whilst China has adopted a hostile approach, and the US relies on 'regulation by enforcement' rather than clear guidelines.

The path forward and the bottom line

The momentum is building beyond just private credit. While private credit leads the tokenised real-world assets (RWA) market today, the broader tokenisation movement is gaining steam across all asset classes. The tokenised market capitalisation across asset classes could reach about $2 trillion by 2030⁵. Northern Trust and Hongkong and Shanghai Banking Corporation (HSBC) forecast that 5% to 10% of all assets will be digital by 2030, whilst Boston Consulting Group predicts asset tokenisation will become a $16.1 trillion business by 2030².

Private credit expanded to approximately $1.7 trillion at the start of 2024⁶, up from $1 trillion in 2020, and is estimated to soar to $2.6 trillion by 2029⁷. As this market grows, tokenised versions will provide both institutions and individual investors with new opportunities.

While the tokenised private credit market has reached $14 billion, this represents less than 1% of the $1.7 trillion private credit market, signalling we're still in the earliest stages of what could become a massive transformation. This small but growing foundation demonstrates the democratisation potential of private credit investing is only just beginning. The combination of cost savings, increased accessibility, and growing institutional participation suggests that both large institutions and individual investors will increasingly access these sophisticated investment strategies.

Whilst regulatory challenges remain, the question isn't whether tokenised private credit will become mainstream, but how quickly it will happen. The future of private credit is digital, accessible, and arriving faster than many expected.

References

¹ InvestaX - 2024: The Year of Institutional Real World Asset Tokenization
² IG Prime - Tokenising Assets
³ RedStone - RWA in On-chain Finance Report: H1 2025 Market Overview
⁴ CryptoSlate - Blockchain private credit and tokenized treasuries value hits combined $1.34B continuing RWA resurgence
⁵ Morgan Stanley - Private Credit Outlook 2025: Growth Potential
⁶ S&P Global - Tokenized Private Credit: A New Digital Frontier for Real World Assets
⁷ Morgan Stanley - Private Credit Outlook 2025: Growth Potential