Tokenize the fund’s LP interests: issue tokens that represent limited-partnership units, gate them to eligible investors under Reg D and Reg S, and enforce transfer restrictions on-chain. It digitizes subscriptions and the cap table; fund and securities law still apply.
You are not tokenizing the fund’s portfolio companies — you are tokenizing the claim an LP holds on the fund. The token is a cleaner wrapper for a limited-partnership interest, not a new instrument.
Why
An LP interest in a VC or PE fund is a security. Tokenizing it means issuing a token that represents each limited partner’s units, so subscriptions, the cap table, distributions, and (limited) transfers happen on-chain instead of in a spreadsheet and a data room. Do it in this order.
- Confirm the interest is a transferable security and fix the structure. The fund’s LPA governs what an LP holds and how it can transfer. Most tokenized funds issue at the LP level, sometimes through a feeder vehicle for a specific investor class. Get counsel to confirm the token represents the interest cleanly.
- Pick the exemption and investor base. LP interests are sold to accredited and institutional investors — in the US, Reg D Rule 506(c) for verified accredited investors, paired with Regulation S for non-US LPs. Route the offering through licensed partners; a technology provider is not a broker-dealer.
- Issue the tokens as the LP units. Each token maps to a subscription. Eligibility, accreditation, and lock-ups are enforced at the token transfer layer, so a unit can only ever move to a wallet cleared to hold it — which is exactly what keeps a private fund private after it goes on-chain.
- Wire distributions and reporting. Capital calls, the distribution waterfall, and NAV reporting have to run against the token holders. On-chain distributions are only as honest as the fund accounting behind them.
- Be realistic about secondary transfers. Fund interests are illiquid and transfer-restricted by the LPA; a token does not change that. Treat any secondary as permissioned and occasional, not a liquid market, and do not promise LPs liquidity the structure cannot deliver.
The edge cases
Feeder vehicles and multiple classes. Different LP classes (fee terms, jurisdictions) map to different token classes or feeders — keep them distinct, one class per token.
Who is the record. A transfer agent or the fund administrator remains the authoritative registrar; the token is the on-chain reflection of that record, and the two must reconcile. See do I need a transfer agent for a tokenized cap table.
GP economics stay off the LP token. Carry and management fees are GP-level arrangements; do not bake them into the LP unit token.
What this means for your structure
Get the LPA and the exemption right first, decide whether you issue at the main fund or a feeder, then tokenize — the chain is the last decision, not the first. Stobox operates here as a technology and preparation layer: Intelligence organizes the fund record, Raisable prepares the offering to the exemption, and Compass issues the LP-unit tokens with eligibility enforced on-chain. Stobox issues security tokens primarily on Base, with Arbitrum and Canton also supported, at a flat fee, never a percentage of the fund. It is not a broker-dealer, fund administrator, or law firm — those roles stay with your licensed providers.
Gene Deyev’s take
The mistake I see with fund tokenization is treating it as a liquidity story. It is not — LP interests are illiquid by design, and a token does not repeal the LPA. What tokenization actually fixes is the operational mess: subscriptions, the cap table, eligibility, and distributions stop living in spreadsheets and start being enforced by the instrument itself. Sell that honestly and you have a better-run fund; sell “instant liquidity for your LPs” and you will have a compliance problem and disappointed investors. Get the vehicle and the exemption right, enforce eligibility at the transfer layer, and keep the promises small and true.
— Gene Deyev, CEO & Co-Founder, Stobox. Co-author of the Stobox Tokenization Framework and the STV3 protocol; ERC-7943 backer; SEC Crypto Task Force roundtable participant (2025).
Related questions
- How to tokenize private credit or a loan book
- Tokenizing through an SPV
- How liquid are security tokens?
- Reg D vs Reg S vs Reg CF vs Reg A
Last updated: 2026-07-12.