Tokenized funds need confidentiality and a regulatory wrapper

A tokenized fund is a regulated investment fund whose units are issued, held and transferred on a blockchain rather than only in a traditional registrar's books. The technology promises faster settlement, programmable distribution and round-the-clock transfer. But two barriers — the lack of on-chain privacy and the absence of a regulatory wrapper — keep most institutional capital on the sidelines. The winning design solves both.

What is a tokenized fund, exactly?

Strip away the vocabulary and a tokenized fund is an ordinary fund with a new register. The underlying vehicle still holds assets, still has a depositary, still values its net asset value, still answers to a regulator. What changes is the medium of record: instead of units sitting in a transfer agent's centralized ledger, they are represented as tokens on a distributed ledger, where they can settle in near real time and move under programmable rules.

This is not a fringe idea. In its October 2024 report Tokenized Funds: The Third Revolution in Asset Management Decoded, BCG argued that tokenized funds could reach 1% of global mutual fund and ETF assets under management within seven years — implying more than US$600 billion in AUM by 2030. The broader real-world-asset (RWA) market that funds sit inside is projected by Ripple and BCG to reach roughly US$9.4 trillion by 2030 and nearly US$19 trillion by 2033.

Real products already exist. Federated Hermes partnered with Archax to offer tokenised UCITS money market funds; Franklin Templeton and others run tokenized money market funds at scale. The direction of travel is clear. The open question is the design — and that is where most of the industry stops short.

Why hasn't tokenization of funds gone mainstream yet?

Because two things are still missing, and they are the two things institutions care about most: confidentiality and compliance.

The first is privacy. Public blockchains are radically transparent by default — every position, every transfer, every counterparty is legible to anyone watching the chain. That is fatal for a fund. As Chainlink has put it bluntly, a lack of privacy is the single greatest barrier holding back large-scale institutional adoption of on-chain finance. When a manager tokenizes a private credit pool or a fund allocation, the lifecycle of that asset — issuance, holdings, redemptions, secondary trades — must stay confidential to protect investors and preserve competitive advantage. You cannot run a serious fund in a glass house.

The second is the regulatory wrapper. A token is not a fund. Investor protection lives in the legal structure around it — the depositary, the valuation discipline, the custody rules, the authorization regime. The EU framework that makes compliant tokenization realistic — MiCA, the DLT Pilot Regime and ELTIF 2.0 — is explicit that tokenization modernizes distribution and settlement without changing the underlying regulatory perimeter. A regulated tokenized fund keeps its custody, valuation and depositary obligations intact; the DLT registry sits underneath an AIFMD- or UCITS-compliant structure, not in place of it. Regulators are now formalizing this: the UK's FCA opened a consultation on fund tokenization in October 2025, proposing rule changes to let authorized funds use distributed ledger technology.

Privacy and a regulatory wrapper are not optional features bolted on at the end. They are the precondition for institutional money to move at all.

Where Chainlink and BCG stop, and what comes next

The diagnosis above is, in large part, the industry's own. BCG quantified the prize. Chainlink built the privacy infrastructure — its Confidential Compute and privacy-preserving tokenization work exist precisely to bring institutional RWAs on-chain without exposing investor information, deal sizes or pricing terms. These are real, important contributions.

But infrastructure and forecasts are not the same as a finished product. A privacy primitive does not make a fund. A trillion-dollar projection does not put a single regulated, confidential vehicle in front of an investor. The synthesis that the market actually needs has three parts, and they have to be assembled by one operator:

Confidentiality is provided by fully homomorphic encryption (FHE): positions, flows and counterparties stay private — computable while encrypted. The regulatory wrapper is provided by a UCITS-style fund structure: custody, valuation, depositary and authorization — investor protection intact. The listed operator brings a public-company balance sheet and governance: accountability, permanent capital and the discipline to run it for real.

Each piece exists somewhere. The unmet need is the combination — a confidential, regulated, operated tokenized fund. That is the gap Pyratz is built to close, and it is consistent with the firm's stated direction rather than a departure from it.

How does confidentiality (FHE) fit on-chain finance?

Fully homomorphic encryption lets computation run directly on encrypted data — you can verify, settle and reconcile without ever decrypting the underlying positions. For a fund, that is the missing link between blockchain transparency and the confidentiality a regulated vehicle requires. You keep the auditability and programmability of the chain while keeping holdings and flows private.

This is not a hypothetical for Pyratz. The portfolio includes Zama, the French unicorn building confidential computing through FHE. And Zama and PyratzLabs formed Zaïffer, a joint venture for "confidential and compliant on-chain finance" (as reported by DL News) — a concrete expression of the same thesis. The conviction that on-chain finance has to be private is not borrowed from a press release; it sits inside the firm's own operating network.

For the wider argument on why confidentiality is the strategic chokepoint for European finance, see our companion piece on sovereign-by-design infrastructure.

What is Pyratz's stated direction on tokenized funds?

Pyratz's published financial calendar sets out the intent plainly. Two milestones are scheduled for the fourth quarter of 2026: a UCITS licence is expected in 2026-Q4, and the first asset-management fund launch is targeted for 2026-Q4. Asset management runs through the subsidiary Stealth AM. A move up to Euronext Growth, following a planned IPO, is targeted for the first half of 2027.

These are forward-looking objectives, subject to regulatory approval and execution risk — not guarantees, not a fund you can buy today, and certainly not a forecast of returns. What they describe is a design philosophy: combine the confidentiality layer (FHE, via the Zama/Zaïffer thesis), the regulatory wrapper (a UCITS-style licence through Stealth AM), and a listed operator accountable to public-market discipline. That is the synthesis this article argues for — and the reason the firm frames the listing not as an exit but as an acceleration mechanism for backing frontier technology.

The bet is not that tokenization will happen — BCG and the regulators have already settled that. The bet is on which architecture wins. Our answer: the one that is confidential and regulated, run by an operator with skin in the game.

Frequently asked questions

What is a tokenized fund?

A tokenized fund is a regulated investment fund whose units are issued and transferred on a blockchain (a distributed ledger) instead of solely in a traditional transfer agent's books. The fund still has a depositary, a net asset value and a regulator; only the register changes, enabling faster settlement and programmable distribution.

Why do tokenized funds need confidentiality?

Public blockchains expose every position and transfer by default, which is unacceptable for a fund that must protect investor information, deal sizes and pricing. Chainlink has called the lack of privacy the greatest barrier to institutional on-chain adoption. Technologies like fully homomorphic encryption (FHE) allow holdings to stay private while still being computable and auditable.

What is a regulated tokenized fund?

It is a tokenized fund that keeps its full legal structure — custody, valuation, depositary and authorization — intact, with the blockchain register sitting underneath a compliant framework such as UCITS or AIFMD. EU rules (MiCA, the DLT Pilot Regime, ELTIF 2.0) confirm that tokenization changes the plumbing, not the regulatory perimeter.

Is Pyratz launching a tokenized fund?

Pyratz's published financial calendar lists a UCITS licence expected and a first asset-management fund launch targeted for 2026-Q4, run through its Stealth AM subsidiary. These are forward-looking objectives subject to regulatory approval and execution risk. Nothing here is an offer, a fund available to buy today, or a promise of returns.

How big could the tokenized funds market become?

BCG estimates tokenized funds could reach 1% of global mutual fund and ETF assets — over US$600 billion — by 2030. The broader tokenized real-world-asset market is projected by Ripple and BCG to approach US$19 trillion by 2033.

Follow our investor-relations updates for official announcements, and read the related thesis on why we list into a market everyone calls dead.

This is not investment advice. This article is forward-looking and describes published objectives that are subject to regulatory approval and execution risk; it is not an offer, a solicitation, or any promise of a fund or of returns. MLPTZ (ISIN FR0013371507) trades on Euronext Access Paris; trading resumed following completion of the post-RTO re-listing. Rely on official regulated information and seek independent advice where appropriate.