The buzz around tokenization in private markets has been relentless. Advocates have long promised a future where blockchain-powered assets make investing faster, cheaper, and more liquid. Critics argue it's more marketing spin than market reality. In 2025, the truth lies somewhere in the middle: tokenization has moved beyond hype, but its success depends on targeted, practical applications.
This week, we separate blockchain buzzwords from real-world use cases—exploring where tokenization is truly creating value for retail investors and fund managers.
What Is Tokenization, Really?
At its core, tokenization refers to converting ownership rights in an asset (equity, debt, real estate, or fund interest) into a digital token stored on a blockchain. These tokens can be:
- Fractionalized into smaller, tradable units
- Tracked immutably with a transparent ownership ledger
- Embedded with smart contracts to automate compliance, cash flows, and redemption
The key promise? Accessibility and liquidity in markets that have historically been closed or illiquid.
Real-World Applications in Private Markets
While the initial hype often focused on "security tokens" replacing traditional securities, the current wave of tokenization is more practical and compliance-driven. Some leading applications include:
- Fractional Real Estate
- Private Equity Funds
- Secondary Market Trading
- Global Investor Access
Tokenization by the Numbers
- $22 billion in tokenized real-world assets (RWAs) were issued globally as of mid-2025, according to Boston Consulting Group, with private credit and real estate leading adoption.
- Institutional asset managers are testing tokenized funds with pension and wealth channels.
- Secondary trading of tokenized private assets has grown 150% year-over-year, though volumes remain modest compared to traditional secondaries.
The Role of Capital Engine® Infrastructure
Tokenization alone doesn't solve the complexity of private markets - it requires trusted infrastructure. This is where Capital Engine® steps in, combining blockchain innovation with real-world compliance.
Our platform and partners can support:
- Investor Onboarding: Seamless KYC/AML, accreditation, and digital wallet creation.
- Smart Contract Compliance: Tokens programmed with transfer restrictions, investor eligibility rules, and cap table limits.
- Integrated Secondary Trading: Matching engines with token settlement and custodian integration.
- Education & Transparency: Investor dashboards showing NAV updates, cash flow schedules, and redemption timelines.
Lifecycle of a Tokenized Investment
Beyond the Buzz: Where We're Headed
By 2030, tokenization will likely be standard plumbing in private markets rather than a headline innovation. The winners will be platforms that integrate blockchain with regulatory compliance, investor education, and liquidity programs.
For retail investors, the takeaway is clear: tokenization isn't just about owning a digital asset—it's about gaining greater access, transparency, and optionality in the private capital markets of the future.
EXPLORE PRIVATE MARKET INVESTMENTS
Private Markets This Month
Private Equity Pulse: key takeaways Private equity exits reach a three-year high, as firms seize opportunities to turn strategic value creation into realized returns. READ MORE
LSEG gets first greenlight to operate private market The FCA has approved the London Stock Exchange (LSEG) as the first operator of a PISCES (Private Intermittent Securities and Capital Exchange System) platform READ MORE
Capital Engine® launches USA REIT Markets a cutting-edge private markets real estate platform, integrated 1031 exchange facilitation, and regulated secondary trading for commercial real estate (CRE) investments READ MORE
Trump Executive Order to Help Open Up 401(k)s to Private Markets U.S. defined-contribution plans held $12.4 trillion in assets at the end of 2024. READ MORE
In the Engine Room Podcast
Up Next: Tokenization: Beyond the Hype — Separating blockchain buzz from real-world applications in private market investing. If you missed any of the earlier issues, you can catch up at: Capitalengine.io/newsletter
Interested in learning more about Capital Engine®
Interested in learning more about Capital Engine® - Request a Demo
Subscribe on LinkedIn to the Private Capital Pulse newsletter to stay ahead of the curve in the evolving world of private investments.
