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The Emergence of Tokenized Investment Funds and Their Use Cases

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Abstract

A blockchain is a distributed database where independent computers across the world maintain identical copies of a transaction record, updating it only when the network reaches consensus on new transactions—making the history transparent and extraordinarily difficult to alter. Historically, bonds have traded almost entirely in over-the-counter (OTC) markets, while equities and money market fund shares have largely settled through centralized infrastructures such as stock exchanges and central securities depositories. In both settings, each institution maintains its own records, and post-trade steps like confirmation, clearing, and settlement require multiple intermediaries and repeated reconciliation.

Suggested Citation

  • Pablo D. Azar & Francesca Carapella & JP Perez-Sangimino & Nathan Swem & Alexandros Vardoulakis, 2025. "The Emergence of Tokenized Investment Funds and Their Use Cases," Liberty Street Economics 20250924a, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:101777
    DOI: 10.59576/lse.20250924a
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    JEL classification:

    • G0 - Financial Economics - - General
    • E0 - Macroeconomics and Monetary Economics - - General

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