Securitize's Tokenized AAA CLO Fund and the Future of Institutional Credit on-Chain

Institutional credit markets have long been a fortress of complexity, opacity, and high barriers to entry. For decades, access to structured credit products like collateralized loan obligations (CLOs) has been limited to a narrow set of sophisticated investors, with settlement cycles stretching days, fragmented liquidity, and operational frictions stifling innovation. But in 2025, a new paradigm is emerging: tokenization is dismantling these barriers, and Securitize's Tokenized AAA CLO Fund (STAC) is at the forefront of this transformation.

A New Infrastructure for Credit

STAC, launched in collaboration with BNY and supported by Grove, is a $100 million institutional-grade fund that tokenizes AAA-rated CLO tranches on the Ethereum blockchain. This initiative is not merely a technological gimmick-it's a structural reimagining of how credit markets operate. By issuing fund shares as digital tokens, STAC enables fractional ownership, instant settlement, and real-time compliance through integrated KYC/AML infrastructure. The result? A product that democratizes access to high-quality credit while slashing operational overhead.

The fund's structure is a masterclass in modern finance. BNY, a custodian of $2.1 trillion in assets, serves as both custodian and sub-advisor, ensuring institutional-grade security and governance. Grove, an on-chain credit infrastructure protocol, has committed a $100 million anchor investment, signaling confidence in the future of structured credit on blockchain. This partnership bridges traditional finance's deep liquidity with Web3's programmable infrastructure, creating a hybrid model that's both scalable and compliant.

Efficiency Gains: From Days to Seconds

The operational inefficiencies of traditional credit markets are well-documented. Settlement for CLO tranches typically takes days, with intermediaries adding layers of cost and risk. Tokenization, however, cuts through this complexity. According to a report by Aminagroup, tokenized cash instruments like BlackRock's BUIDL have demonstrated settlement times reduced from 3–5 days to under 30 seconds, with transaction costs dropping to 2–3% of value from 6% historically. While direct metrics for STAC are not yet public, the underlying blockchain infrastructure suggests similar gains are achievable for CLOs.

Moreover, tokenization unlocks liquidity in ways traditional markets cannot. By fractionalizing ownership, STAC allows smaller investors to participate in AAA-rated CLOs-a market exceeding $1.3 trillion globally. This is a stark contrast to the pre-ETF era, where liquidity in structured credit was a myth. As Grove's co-founder Sam Paderewski notes, tokenization "connects institutional capital with real credit on-chain," creating a two-way street between traditional and digital finance.

The Broader Implications: Credit for the Masses

The rise of tokenized credit is part of a larger shift in capital markets. Real-world asset (RWA) tokenization has grown from $85 million in 2020 to over $25 billion by mid-2025, driven by demand for yield, transparency, and regulatory clarity. STAC is a natural extension of this trend, targeting a segment of the credit market that's been historically underrepresented in tokenization.

This shift mirrors the rise of ETFs in the 1990s, which transformed accessibility and liquidity in equity markets. Tokenized CLOs could do the same for credit, enabling real-time trading, automated compliance, and global participation. The U.S. Securities and Exchange Commission (SEC) has even hinted that blockchain infrastructure could become the backbone of American financial markets within two years, a vision STAC is helping to realize.

Challenges and the Road Ahead

Despite its promise, tokenized credit is not without hurdles. Regulatory frameworks are still catching up to the speed of innovation, and market participants must navigate uncharted territory in custody, governance, and investor protection. However, the collaboration between Securitize and BNY-a firm with deep regulatory expertise-suggests a path forward. As Carlos Domingo, CEO of Securitize, states, the fund is "a significant step toward making high-quality credit more accessible and transparent through digital infrastructure."

Conclusion

Securitize's Tokenized AAA CLO Fund is more than a product-it's a blueprint for the future of institutional credit. By leveraging blockchain's strengths-transparency, programmability, and efficiency-STAC is unlocking a $1.3 trillion market for broader participation. As tokenization scales, we can expect to see similar innovations in other structured credit products, further blurring the lines between traditional finance and decentralized infrastructure. For investors, this means a new era of access, liquidity, and yield-one where credit markets are no longer a fortress but a fluid, global network.