Flow Capital Tokenizes $150M Private Credit Fund via DigiFT, Sparking Liquidity Debate: LatestDeFiNews
Hong Kong's Flow Capital is tokenizing a $150 million private credit fund on DigiFT, aiming to raise an additional $30 million. This move highlights the growing trend of traditional finance embracing blockchain for distribution, yet industry experts caution against equating tokenization with guaranteed liquidity for il
Why it matters
Flow Capital, a Hong Kong-based credit manager, is set to tokenize its $150 million private credit fund through Singapore's DigiFT platform. The initiative, reported by Bloomberg, aims to raise an additional $30 million in tokenized shares by the end of 2026, expanding the fund to $250 million with a target 12% net return. While this move aligns with a broader push by TradFi giants like BlackRock and JPMorgan into asset tokenization, prominent crypto executives from Ondo Finance and Tether warn against the misconception that tokenizing an illiquid asset automatically confers liquidity. Despite these warnings, the total value of tokenized real-world assets (RWAs) continues to grow, reaching nearly $30 billion, with tokenized US Treasury debt leading the charge.
Market focus
Key takeaways
- Flow Capital is tokenizing a $150M private credit fund via DigiFT to raise an additional $30M, expanding the fund to $250M.
- This move reflects a broader TradFi trend towards asset tokenization, following initiatives by BlackRock and JPMorgan.
- Industry experts caution that tokenization does not automatically confer liquidity to inherently illiquid assets, urging investors to differentiate.
- The total value of tokenized real-world assets (RWAs) has grown to nearly $30 billion, with US Treasury debt leading the sector.
- Investors should scrutinize the liquidity mechanisms of tokenized private credit and monitor regulatory developments in this evolving market.
Flow Capital Embraces Tokenization for Private Credit Fund
Hong Kong-based credit manager Flow Capital is making a significant foray into the world of tokenized real-world assets (RWAs), announcing plans to tokenize its $150 million private credit fund via Singapore's DigiFT platform. The strategic move, initially reported by Bloomberg, aims to leverage blockchain technology for enhanced distribution and to secure an additional $30 million in capital by the close of 2026.
This initiative is designed to expand the fund's total size to $250 million, targeting a net return of 12%. Launched in mid-2025 with $125 million in seed capital, Flow Capital's decision underscores a growing trend among traditional finance (TradFi) institutions to explore blockchain rails for various financial products.
TradFi's Growing Embrace of Tokenization
Flow Capital's tokenization effort is not an isolated incident but rather part of a broader, accelerating trend. Major players in traditional finance have been actively exploring and launching tokenized products. For instance, asset management behemoth BlackRock introduced its BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a tokenized treasury fund on Ethereum, in March 2024. Similarly, investment banking giant JPMorgan launched its tokenized money-market fund, My OnChain Net Yield Fund (MONY), on Ethereum in December 2025.
These developments highlight a clear shift towards integrating blockchain technology into mainstream financial operations, particularly for distribution and potentially for fractional ownership and increased transparency.
The Nuance of Liquidity: A Key Caution for Investors
Despite the enthusiasm surrounding asset tokenization, industry leaders are vocal about a critical misconception: tokenization does not inherently guarantee liquidity for otherwise illiquid assets. Oya Celiktemur, Sales Director for Europe at Ondo Finance, emphasized this point during Paris Blockchain Week 2026, stating, "I think there’s still this idea that tokenizing something illiquid will somehow magically make it a liquid asset, which is just not true."
Francesco Ranieri Fabracci, Head of Tokenization Expansion at Tether, echoed this sentiment, clarifying that while tokenization itself doesn't create liquidity, certain instruments like bonds, money market funds, and stablecoins are more likely to achieve consistent liquidity on blockchain rails due to their inherent characteristics. This distinction is crucial for investors and traders considering tokenized private credit, which by nature, often involves less liquid underlying assets.
Market Implications and What to Watch Next
The total value of tokenized real-world assets has seen robust growth, climbing 9.6% over the past 30 days to reach $29.9 billion. Tokenized US Treasury debt remains the largest sector, valued at $13.7 billion, followed by commodities at $5.4 billion and asset-backed credit at $3.2 billion. This growth trajectory suggests continued institutional interest and capital flow into the RWA sector.
For traders and investors, Flow Capital's move signals further integration of private credit markets with blockchain infrastructure. While the promise of broader access and fractional ownership is compelling, the warnings from experts underscore the need for due diligence regarding the actual liquidity mechanisms of specific tokenized products. The market will be closely watching how tokenized private credit funds like Flow Capital's perform in terms of secondary market activity and investor redemption capabilities. The regulatory landscape surrounding these hybrid financial products will also be a critical factor influencing their long-term viability and adoption.
FAQ
What is Flow Capital doing with its private credit fund?
Flow Capital is tokenizing its $150 million private credit fund through the Singapore-based platform DigiFT. The goal is to raise an additional $30 million in tokenized shares by the end of 2026, aiming to expand the fund to $250 million.
Does tokenization guarantee liquidity for illiquid assets?
No, industry experts like those from Ondo Finance and Tether explicitly state that tokenization does not magically make illiquid assets liquid. While it can improve distribution and access, the underlying asset's liquidity characteristics remain crucial.
