If you listen to the masters of the financial universe, a revolution is upon us. In his 2025 letter, Larry Fink of BlackRock hailed tokenisation as the path to "democratisation." The narrative is seductive: every asset—stocks, bonds, art, real estate—will live on a blockchain. Settlement becomes instant. Friction disappears. The gates of high finance are thrown open to the masses.
Blockchains and shared ledgers can transform how private assets are issued, held, and traded. Speed improves. Paperwork shrinks. Ownership is clear and verifiable. Trading and settlement costs fall. Fractionalization unlocks access. Liquidity appears where none existed.
It’s a compelling story—especially if you own private credit and equity. Strip out the marketing, and a discomfort remains.
The magic features of tokenisation are the basic features of public markets.
- Speed and paperwork: Listed shares trade and settle rapidly. Retail platforms offer near-instant execution. Institutional settlement is streamlined and electronic.
- Centralised clearing: Stock exchanges, central counterparties, and regulated registries exist to show who owns what at every moment.
- Cost savings: Commissions fell from 1–2% in the 1970s to basis points today. Sub 0.1% trading is the norm.
- Fractionalisation: Right now, our clients can buy 0.01 share of Alphabet or 0.245 shares of ASML in a managed account. Of the developed markets, it is easier to list the four markets without fractional shares (sadly Australia is one) than list the ones where you can.
- Frequent trading: Public markets trade every day, often with extended hours. Liquidity ebbs and flows, but is visible and monitored.
So what is tokenisation really offering?
In most cases, it’s the promise to graft public-market conveniences onto private-market assets without the rules.
Regulatory arbitrage.
Public markets force discipline. Audited accounts. Boards with fiduciary duties. Continuous disclosure. Clear rules on who can sell and who can buy. Frameworks that make it harder for sanctioned actors or hidden beneficial owners to lurk in the shadows. These protections exist because we learned the hard way what happens without them.
Private assets sit outside much of that. Fees can be higher. Valuations can be slower to update. Transparency is thinner. You need to trust the general partner, the administrator, the pricing model, and the governance. If tokenisation brings public-market functionality to those assets without public-market obligations, it may expand distribution—but also expand the scope for old problems to come back with fresh branding.
Will a tokenisation boom happen in unlisted assets?
It might.
Policy in the United States has trended toward easing the path for private assets to reach a broader buyer base. Private credit and private equity have exploded in size. Rules on advertising to retail clients has already been loosened.
The cynic in me notes that early investors now want exits, and new retail investors are an attractive option to be left holding the bag.
Tokenisation offers a new channel to reach retail, wealth platforms, and smaller institutions that were once fenced off. That is attractive if you own the inventory and collect the fees.
My view is simple: buyer beware. If you want the benefits of public markets, you should demand the protections of public markets. If a jurisdiction believes public markets are overregulated, reduce the burden in public markets itself. Do not smuggle public-market benefits into private assets and skip the matching oversight. We know where that path leads.
The Real Play: Private Market Liquidity
BlackRock and other giants have pushed hard into private credit and private equity. Why? Because that is where the fees are. Public market strategies often charge mere basis points. Private equity typically charges 1–3%, plus performance fees, plus hidden costs (consulting fees, director fees) paid by portfolio companies.
But private markets have a massive flaw: Illiquidity.
If you buy into a private equity fund or an unlisted property trust, your money is trapped for years. Entry costs are high—stamp duty on commercial property alone can hit 5%, and total entry friction can reach 10%.
This is where tokenisation comes in. It isn't about saving you 2 cents on an Apple trade; it is about creating a secondary market for illiquid, high-fee private assets.
- Lower Minimums: Tokenisation allows them to chop a $50 million building or a $1 billion credit fund into $1,000 tokens.
- Broader Buyer Base: By lowering the barrier to entry, they expand the pool of potential buyers from sophisticated institutions to mass-affluent retail.
Summary: Don't Confuse Utility with Marketing
Tokenisation is real technology. It has genuine utility for backend settlement, cross-border flows, and atomic collateral management.
But when Larry Fink talks about "democratisation," translate that to "distribution."
They have maximised the amount of capital they can extract from pension funds. To keep the fee machine running, they need a new audience to buy into private credit and unlisted assets just as the credit cycle looks shaky.
Tokenisation is the shiny wrapper that lets them sell illiquid, high-risk, opaque assets to the public, potentially leaving retail holding the bag when the music stops.