Asset Managers Embrace Blockchain for 21st Century Operations

Asset managers are increasingly recognizing the potential of blockchain technology to revolutionize their operations and product offerings. According to Tuongvy Le, an advisor to both traditional financial institutions and crypto-native firms, blockchain and tokenization present a significant opportunity for asset managers to better serve the next generation of investors. These financial institutions, which manage trillions across various asset classes, often rely on outdated infrastructure that is ill-suited for modern financial operations.

Investor records are typically kept in spreadsheets, capital calls are sent via email, and waterfall calculations are done manually. This outdated technology stack is fragile, opaque, and in dire need of an upgrade. Blockchain, however, offers a modern financial operating system that can streamline fund administration and operations, while also unlocking new product offerings to better serve existing and future clients.

The average investment firm still relies on a complex web of administrators, custodians, and transfer agents, each working from their own systems and reconciling records manually. This process is prone to errors, delays, and lack of transparency, while the cost of compliance and administration continues to rise. Blockchain and tokenization can address these inefficiencies by standardizing workflows across multiple participants. A permissioned ledger shared between general partners, limited partners, fund admins, transfer agents, auditors, and more can serve as the single source of truth for investor accounts, capital flows, and transaction history. This eliminates the need for fragmented systems, siloed information, and weekly reconciliations, ensuring that everyone operates from the same data, updated and visible in real time.

Smart contracts can automate capital calls, distributions, and even complex waterfall logic, ensuring that the correct payments go to the correct counterparties instantly and transparently. The tokenization and interoperability of different asset types can enable automated, instantaneous settlement, eliminating the need for PDFs, wire delays, and human error. These operational upgrades allow investors to hold digital fund shares, settle redemptions in stablecoins, and track yield accrual in real time, which is a game-changer for cash management and operational teams.

Blockchain and tokenization are not just about liquidity; they offer an opportunity to replace a clunky patchwork of systems with a streamlined, programmable foundation for fund operations. The next frontier is even more exciting: using blockchain technology to build products that couldn't exist before. Tokenized private credit, for example, allows for fractional ownership, secondary liquidity, and a more accessible wrapper for investors who want exposure to these products without the commitment of a traditional limited partner structure.

Forward-looking firms are building entirely new kinds of on-chain products, such as on-chain yield vaults. These are like self-executing investment strategies that stake tokenized assets, sell covered calls, lend to protocols, or arbitrage rates across decentralized finance (DeFi). Companies like Veda Labs are pioneering smart contracts that allow institutions like asset managers to offer white-labeled, branded investment strategies that automate execution while embedding compliance and fee logic directly into the protocol. This new category of investment product is more transparent than an ETF, more automated than a hedge fund, and infinitely more programmable than any legacy wrapper.

Asset managers do not need to abandon what they are good at, but they do need to modernize how and what they deliver. Blockchain is not a threat to private markets; it is the upgrade that private markets have been waiting for. It offers a way to clean up back-office complexity, lower operational risk, and serve clients with products that are faster, smarter, and more productive. The tools are ready, the infrastructure is live, and the first movers have already shown what is possible. Asset managers who ignore this innovation risk getting left behind, as the next generation of investment platforms is already being built: on-chain, in real time, and at scale.