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Tokenized private credit can change how an investor holds a fund interest or how a loan is recorded and serviced. Those changes need separate evaluation: a transferable token tells an investor little about the borrower’s ability to repay or the legal rights available after a default.
Private-credit assets under management reached $1.748 trillion in June 2025, compared with $357 billion at the end of 2010, according to Preqin data published by the Investment Company Institute. The series excludes funds of funds and measures private-credit AUM, not the value of tokenized loans. Source: ICI, April 2026, Figure 5.
We developed this report with Avalanche to examine the distinction between tokenizing an investment wrapper and changing the underlying loan workflow.
Identify the claim and the servicing process
Start with what the token represents: a fund interest, a direct claim on a borrower or another contractual right. Then trace the records and processes behind it. Where are collateral records maintained? Who supplies repayment data? Which payment instructions execute automatically, and who can intervene?
The BIS describes tokenization as bringing asset and ownership information together with programmable rules. It also identifies economic, legal and technical obstacles to doing so. Our reading is that the strongest operational case must explain the connection between the digital record and the enforceable claim. Source: BIS Bulletin 72, April 2023.
Keep credit and liquidity assumptions explicit
For a proposed transaction, document underwriting, collateral valuation, payment priority and the procedure after default. Assess redemption terms separately from token transferability. These questions provide a way to evaluate a structure; they do not establish that tokenization improves returns or makes a particular loan liquid.
Sources and limits: This introduction uses the report’s public thesis and the dated sources above. It presents no verified market share or growth rate for tokenized private credit and makes no claim to reproduce the full report’s methodology.
Correction: We replaced the original market-size comparison with a dated, defined series and removed a tokenized-credit growth calculation that did not match its stated endpoints. The original tokenized-credit endpoints and market-share claim remain under review.
