Tokenized Fund vs Tokenized SPV

Operates under established frameworks like the EU's ELTIF or US 40-Act. This enables broad, compliant distribution to accredited and retail investors via platforms like Securitize or Ondo Finance. Ideal for creating liquid, secondary markets for traditional assets.

Higher compliance and management overhead. Requires a licensed fund manager (AIFM), a depository, and regular NAV calculations. Platforms like Maple Finance or Centrifuge handle this infrastructure but add cost. Not suitable for one-off or bespoke deals.

Single-purpose legal entity built for a specific asset (e.g., a real estate property). Streamlines governance and reduces setup time/cost using templates from Syndicate or OpenLaw. Perfect for club deals and discrete asset acquisition.

Designed for defined investor groups, not public markets. Transfer restrictions are common, and exiting requires selling the whole SPV interest. Tools like Arca Labs focus on this model but it lacks the fungibility and deep liquidity of a fund token.

Operational Simplicity & Cost: Lower legal and administrative overhead. No need to create a separate legal entity for each fund, reducing formation costs by 60-80% compared to SPVs. Ideal for liquid alternative strategies and index products like those from Ondo Finance or Maple Finance.

Regulatory & Investor Limitations: Often restricted to accredited investors under Reg D 506(c) in the US, limiting the investor base. The fund's assets are co-mingled, which can create complex liability structures and less granular control for large, specific mandates.

Asset Isolation & Targeted Investment: Each SPV is a distinct legal entity holding a single asset or a tightly defined pool (e.g., a specific real estate property or private credit loan). This provides bankruptcy remoteness and is perfect for single-asset securitization on platforms like Centrifuge or Securitize.

High Setup Friction & Cost: Each new asset requires forming a new legal entity, leading to significant legal fees and administrative burden. This model is less suitable for actively managed, multi-asset portfolios due to prohibitive operational complexity and cost at scale.

Operates under established frameworks like the Investment Company Act of 1940. This provides clear investor protections (e.g., custody rules, NAV calculations) and is familiar to institutional allocators. This matters for funds targeting accredited investors or those requiring a traditional legal wrapper for compliance.

Higher overhead and slower execution. Requires a registered advisor, audited financials, and often manual subscription/redemption processes. Settlement can take T+2 or longer. This matters for strategies requiring frequent capital deployment or where operational cost as a percentage of AUM is a critical metric.

Leaner legal structure enabling rapid deployment. An SPV can be spun up in days vs. months for a registered fund. On-chain management automates capital calls, distributions, and fee calculations, reducing administrative costs by ~60-80%. This matters for single-asset deals, venture syndicates, or time-sensitive opportunities.

Native blockchain integration unlocks DeFi levers. Holdings can be used as collateral in lending protocols (Aave, Compound) or provide liquidity in DEX pools. However, this can lead to fragmented liquidity across multiple SPV contracts, complicating portfolio-level analytics and increasing smart contract surface area risk.

Evolving and uncertain compliance landscape. May not clearly fit into existing securities or company laws, creating potential liability for sponsors. Relies heavily on the Howey Test and future SEC guidance (e.g., regarding decentralized governance). This matters for institutions with strict compliance mandates or publicly-traded sponsors.

Structured for periodic, not continuous, liquidity. Typically offers quarterly or annual redemption windows, not 24/7 trading. While shares can be tokenized, secondary trading is often restricted to qualified platforms (e.g., Securitize, ADDX). This matters for investors prioritizing capital lock-up for strategy integrity over immediate tradability.