While cryptocurrency has been central to the digital economy for some time now, a new sector is emerging: tokenisation – the process of digitising tangible and intangible assets on the blockchain. Its appearance coincides with a critical juncture for private markets.
According to McKinsey, fundraising for traditional commingled vehicles declined 24% year-on-year in 2024, marking the third consecutive year of contraction. This data point highlights three critical trends as explored in Jersey Finance's recent paper, Trends in Alternative Investing, produced in partnership with IFI Global.
First, managers are diversifying beyond traditional institutional investors, targeting family offices and the broader high-net-worth (HNW) segment – a significant yet untapped market. Bain's Global Equity Report finds individual investors control approximately 50% of the US$295 tn in global AUM, yet account for only 16% of AUM managed by alternative investment managers.
Second, investor demand for more tailored structures is rising. Traditional fund models are giving way to more bespoke solutions – including managed accounts, co-investments, funds of one, and hybrid vehicles – as allocators seek greater control, transparency, and alignment.
Third, the composition of private markets themselves is evolving. Strategies such as private equity, while still dominant, are becoming increasingly supplemented – and in some cases displaced – by sustainable investment strategies and private credit, both of which are demonstrating robust growth.
These three distinct but interrelated trends are coming together to create a transformational shift in the global investment funds space – a shift that requires a deep understanding of what is happening in the market, but that also offers tremendous opportunity for both managers and investors.
Jersey Finance's Elliot Refson, Head of Funds, explains that the shift is symbiotic:
"High-net-worth and family offices want alternative investments and more control of their capital, while managers want access to new investor bases.
"With asset raising no longer as straightforward as it once was and with technology evolving at pace, investor diversification, product diversification, and structural diversification are set to truly transform the sector over the coming years."
Tokenisation might just be the answer.
A growing market
The market for tokenised real-world assets hit US$13.5 bn at the end of 2024, according to Portfolio Institutional. It is expected to hit the trillions by 2030.
HSBC and Northern Trust estimate that 5-10% of all assets will be tokenised by 2030. A recent Calastone survey further supports this trend, showing that 67% of US managers plan to offer tokenised products within the next 12 months, with another 22% following within three years.
The shift isn't without precedent, reflecting earlier trends in digital currencies, explains Refson. "Ten years ago, virtual currencies were revolutionary and faced scepticism. Today, they represent a US$3 tn market."
Clearly the direction of travel is to make this a core part of people's portfolios at scale, adds Philip Pirecki, Jersey Finance's Lead in the Americas. With regulatory frameworks already under discussion, he says, widespread adoption is likely to follow – and jurisdictions must be prepared.
"If jurisdictions do not remain relevant to the needs of managers and investors, they lose their value – and participants will vote with their feet," he warns. Conversely, those same managers and investors will move to a jurisdiction that gets it right.
"Being able to adapt has always been a hallmark of the international funds industry – but that change has, by and large, been incremental rather than seismic. Now, however, the status quo in the global alternative and private investment sector is being challenged like never before.
"If fund managers are fully prepared for what this means, they can seize exciting new opportunities and continue to thrive," says Refson.
Ahead of the game
As a jurisdiction, Jersey has a strong track record in digital innovation, from regulating the world's first bitcoin fund in 2014 to applying AML controls for virtual currency exchanges in 2016 and issuing ICO guidance in 2018.
In August last year, the Jersey Financial Services Commission released new guidance on tokenising real-world assets and updated ICO rules, recognising blockchain's potential and reinforcing Jersey's position as a competitive international finance centre.
For tokenisation, Jersey applies its established securitisation framework, offering streamlined CDD requirements, no limits on note holders, and a unique regulator-issued consent confirming compliance.
On a broader scale, Jersey has seen a diversification in its fund structuring landscape in recent years. In particular, while more traditional Collective Investment Fund vehicles have shown a decline in volume over the past five years, the Jersey Private Fund (JPF) has grown by more than 170% over the same time frame.
In addition, Jersey has witnessed a rise in funds of one, co-investment and smaller co-mingled vehicles, whilst investment structuring through corporate vehicles is at record levels. Enhancements to the Limited Partnership (LP) and Limited Liability Company (LLC) regimes have broadened the structuring picture further.
At a thematic level, Jersey has been proactive in developing a sustainable finance strategy, which aims to position Jersey as the leading IFC for sustainable finance solutions in the markets it serves by 2030.
In March 2025, Jersey Finance held its first Sustainable Finance Summit, with an objective to drive progress in this space to meet investor demand. Flexibility built into Jersey's structuring landscape is also supporting growth in the private credit and debt markets.
The depth of technical and regulatory capability makes Jersey a "mini-London," Pirecki says – and the jurisdiction is open for new applications.
Read Jersey Finance's report Trends in Alternative Investing.
This article was first published on the Private Equity Wire platform.
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