Tokenisation can be applied to common fund structures such as Cayman Islands ELP, BVI funds, Hong Kong LPF (Limited Partnership Fund), and OFC (Open-ended Fund Company). Jurisdiction choice depends on regulatory requirements and investor base. Fund managers in Hong Kong need to be aware that there are certain uplift requirements before tokenizing their fund; the regulator will need to assess their application and workflow before giving their grant. It is necessary to work closely with your legal advisor, blockchain agent, tokenization tech provider, and fund administrator to structure your tokenized fund in a proper way.

In a tokenised fund, fund shares or partnership interests are represented as tokens on a blockchain. Tokens act as a digital representation of legal ownership of the fund’s shares recorded off-chain.

This refers to the record of the investor registry where the information of the investor will be maintained upon the subscription/redemption being completed and approval. However, the investor's record is not publicly available.

Normally, there are no restrictions on the tokenized fund investments. The fund can still invest in various assets, e.g., private equities, listed securities, virtual assets, fund of funds, etc.

This is also known as ‘Tokenization Management Platform’, the blockchain agent is to manage and implement the tokenization process, including the tokenization solution provided by the blockchain technology service provider to create smart contracts, mint and issue tokens, and call back all tokens when applicable at maturity.

Yes. Fund admin is crucial to a tokenized fund operation from front to back. Fund managers can leverage the fund operation with an experienced fund administrator to cover from NAV calculation and performance fee computation, Registrar services (official ownership register), AML/KYC screening, and Investor reporting. And in particular, reconciliation between blockchain and off-chain records.

The fund tokens will be minted upon the completion of the subscription. Investor completes KYC/AML Subscription funds received in the fund’s bank account. Minting is triggered by the authorized party, e.g., Investment Manager, via a certain layer of approvals (e.g., Ulti-signature/approvals).

Similar to the token minting process, the fund tokens will be burned upon the completion of the redemption. The redemption request needs to be submitted by the investor, subject to the redemption processing. Once the procedure is completed, the investment manager can process the token burning process, and the fund admin will follow up on the on-chain and off-chain reconciliation.

The fund will need a custody wallet to custody the token minted by the fund. Secure storage of tokens managed by a licensed custodian is a common practice for a tokenized fund. The minted tokens are held in custody by the Token Custodian under the management of the Investment Manager, while the Fund Administrator ensures on-chain/off-chain reconciliation to maintain consistency between on-chain tokens and off-chain legal ownership records.

The token price will mirror the NAV per share calculated by the fund administrator. NAV of the fund largely depends on the performance of the fund’s underlying investment.

The fund tokens are not freely tradable due to their nature. Token transfer is allowed only under strict conditions: the ‘Buyer’ must become an investor of the fund in the first place, that is, they need to complete the subscription process first, and upon approval by the Investment Manager, the token transfer is executed via a designated blockchain.

The number of tokens and their price (on-chain record) should be consistent with the number of fund shares and NAV per share (off-chain record). Therefore, the Fund Administrator will perform on/off-chain reconciliation to ensure they are aligned.

In case any tokens are to be distributed to any investor’s wallet. The wallet needs to be verified first. Different whitelisting methods are adopted. Only whitelisted addresses can receive tokens wallet based on the investor's wallet type. Only whitelisted addresses can receive or transfer tokens.