Tokenization of Traditional Finance: Invesco and DigiFT Partner on $6.3 Billion Private Credit Fund

Singapore-based blockchain platform DigiFT has announced a major collaboration with Invesco to tokenize a $6.3 billion private credit fund. This move marks a significant step in bridging the gap between traditional finance and blockchain technology.

The partnership allows institutional investors to purchase tokenized shares of the fund using U.S. dollars or stablecoins like USDC and USDT. The Invesco private credit fund primarily invests in senior secured loans and has delivered a 4.5% annual net yield since its inception in 2006, according to DigiFT CEO Henry Zhang.

Benefits of Tokenization

Tokenization, the process of converting conventional assets into digital representations on the blockchain, is expanding rapidly. Currently, 80% of real-world assets on-chain are private credit, driving this trend. The Invesco private credit fund offers daily liquidity, making it a more flexible option for investors compared to most tokenized private credit funds with long redemption cycles.

A Step Forward for Invesco

This collaboration with DigiFT marks Invesco’s first attempt at fund tokenization, although the asset manager has previously offered crypto-linked exchange-traded funds. Invesco estimates that tokenized funds could manage up to $600 billion by 2030, representing 1% of the total assets in mutual and exchange-traded funds.

DigiFT’s Growing Presence in Tokenization

DigiFT, a key player in the tokenization space, recently became the first distribution partner for UBS’s uMint, a tokenized money market fund. The platform is subject to Singaporean regulations and is licensed as a market operator and capital markets entity.

Settlement and Liquidity

Settlements for DigiFT’s tokenized Invesco fund will take up to five days, despite daily redemption availability. However, Zhang plans to launch an on-chain liquidity pool that would enable investors to rapidly redeem tokens at a small discount.

Blockchain Adoption in Traditional Finance

With prominent asset managers like Franklin Templeton and BlackRock adopting tokenization, DigiFT’s latest move highlights the increasing use of blockchain in traditional finance. This trend is expected to continue, with more institutions exploring the benefits of tokenization.

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