Last Update: 26.08.2026

Asset Tokenization Services

Choosing the Right Fund Unit Tokenization Model

The right adviser should help you decide what the token will legally represent before you choose a blockchain or technology platform. A fund unit or share is the legal interest an investor owns in the fund, and what the token represents in relation to that interest is the central question in any fund unit tokenization model.

Will investors own units in the fund itself? Units in one tokenized share class? An interest in a separate feeder fund? Or only a claim against another company that holds or tracks the fund units?

The answer affects the rights attached to tokenized fund interests, as well as regulation, custody, transfers and redemptions. It also determines which record proves legal ownership. For this reason, the first step should be a model options paper and decision matrix. Technical implementation should begin only after the legal and operating model is clear.

What does fund tokenization actually change?

Fund tokenization uses digital tokens and distributed ledger technology (DLT) in the ownership or operating process of a fund. DLT is a shared digital database used to record transactions.

Tokenization does not automatically create a new type of investment. In many projects, the underlying fund, investment strategy and investor rights remain largely the same. What changes is how interests are issued, recorded, transferred or serviced.

It is also important to distinguish a tokenized fund from a “fund token”. A tokenized fund still has a legal fund structure. A “fund token” is only a label. It might represent:

a direct unit or share in the fund
an indirect interest held through a custodian or other intermediary
a separate contract linked to the fund’s value.

The name of the token does not tell investors which of these rights they receive. The legal documents and the official ownership record do.

Which fund tokenization models can be used?

There are five common model families. Their names are useful working descriptions, not universal legal categories.

Model	What the investor holds	When it may be useful	Main issue to resolve
Native tokenized fund units	A direct unit or share in the fund, represented through a token	When local law and the fund documents allow the token and DLT record to form part of the legal issuance and ownership process	Whether a token transfer legally transfers the fund interest
Tokenized share or unit class	A unit or share in one designated class of an existing fund	When the sponsor wants to offer a tokenized format to a particular investor group or distribution channel without changing the whole fund	Whether the tokenized format is a separate class and how it works alongside other classes
DLT register or digital register model	A conventional fund unit or share; DLT records or supports ownership information and transactions	When the fund wants to improve its register or dealing process without changing the legal instrument	Which record is legally authoritative and how differences between records are corrected
Feeder structure	A unit or share in a separate feeder fund that invests in the main fund	When investors need a separate vehicle for a particular market, investor group or distribution route	How the feeder and main fund coordinate subscriptions, cash flows and redemptions
Other wrapper or intermediary model	A claim against a custodian, special-purpose vehicle or other issuer that holds or tracks the fund interest	When direct ownership of the underlying fund units is unavailable or unsuitable	Whether investors have direct, indirect or only contractual rights, and what happens if the intermediary fails

Sometimes the best answer is not to change the fund structure at all. A project may achieve its goal by improving the register or investor workflow instead of issuing a new tokenized instrument.

When do native tokenized fund units make sense?

Native tokenized units are the most direct model. The token represents the actual fund unit or share.

This model may work when the law, fund documents and appointed service providers all support digital issuance and transfer. The project must answer several practical questions:

What action legally creates or transfers the unit?
Who maintains and corrects the ownership record?
What happens if an investor loses access to a wallet?
Can a transfer be frozen or reversed when required by law or a court order?
How are the investor’s identity and eligibility linked to the wallet?

The technology cannot answer these questions by itself. The fund documents, applicable law and operating procedures must provide the answer.

A share class is a category of units in the same fund with its own terms, such as fees or investor eligibility. In a tokenized share-class model, only that category uses tokens. Other classes can continue in the usual form.

This can be useful when the fund wants to test a new distribution channel or serve a specific group of investors. However, the sponsor must determine whether the tokenized format is legally a new class or simply another way of holding the same class.

That distinction may affect investor rights, fees, disclosures, approvals and conversions between tokenized and conventional holdings. The administrator and other providers must also be able to operate both formats without creating inconsistent records.

When can the DLT register itself be the ownership record?

Sometimes, but not in every country or for every fund.

The official register is the record that legally shows who owns the fund units. A DLT unitholder register may serve as that official record where the applicable law and fund rules allow it. The responsible firm must still be able to correct errors, produce records, protect data and continue operating during a system failure.

The FCA’s April 2026 policy statement on fund tokenisation added guidance for UK authorised fund managers that want to keep the unitholder register on DLT. This is a UK example, not a global rule.

In another model, the traditional register remains official and DLT is only a supporting system. It may record transfer instructions, provide information to investors or help with reconciliation. In this case, the project must state clearly:

which record prevails if the records do not match
who must correct the difference
how quickly the records must be aligned
what happens during an outage or disputed transaction.

When is a feeder or wrapper justified?

A feeder or wrapper adds a new legal layer between the investor and the main fund. This can solve a genuine distribution, custody or market-access problem, but it also creates more complexity.

In a feeder structure, investors buy units in a separate feeder fund. The feeder then invests in the main fund. Tokenizing the feeder’s units does not automatically tokenize the units of the main fund.

An alternative wrapper may be issued by a custodian, a separate company created for the structure, or another intermediary. The investor may then hold a claim against that company rather than a direct interest in the fund.

Before using either model, the sponsor should understand:

what the investor legally owns
who holds the underlying fund units
how income, voting rights and information are passed to investors
how investors redeem their interests
what happens if the feeder, custodian or wrapper issuer fails.

A wrapper should be selected because it solves a defined legal or commercial problem, not because it is technically easy to issue a token.

Are tokenized fund units regulated securities?

They may be. The exact classification depends on the fund, the rights attached to the token and the law in each country where it is issued or offered.

Tokenization does not remove an instrument from the rules that already apply to it.

United States

In the United States, a January 2026 SEC staff statement explains that recording a security on a blockchain or in a traditional database does not change the application of federal securities laws. The statement also distinguishes direct issuer-sponsored tokens from third-party custodial structures and synthetic structures, where the token may provide exposure without direct ownership. It represents staff views rather than a Commission rule.

European Union

In the European Union, units in collective investment undertakings are included among the financial instruments listed in MiFID II. The actual analysis still depends on the instrument and the relevant EU and national rules.

This is why the classification must be confirmed for the fund domicile and every target investor market. A conclusion for one country should not be reused as a global answer.

Tokenization does not automatically change the fund’s dealing rules.

Investors may still need to complete identity and eligibility checks, submit a subscription request and transfer money. The request may then be processed at the fund’s next dealing point—the scheduled time when the fund prices units and processes orders. Redemptions may still be processed at the fund’s calculated net asset value (NAV), meaning the value used to price each unit or share, and under the timing rules in its documents.

A token may make parts of the workflow more automated. It does not automatically create instant settlement, continuous NAV, 24/7 redemption or market liquidity.

Direct-to-fund dealing is also a separate choice. It describes investors dealing directly with the fund instead of through an intermediary. It should not be treated as a tokenization model by itself.

Which questions should be answered before choosing a model?

The sponsor can rule out unsuitable options early by answering eight questions:

What legal form does the fund use?
What exactly will the investor own?
Which record will prove legal ownership?
In which countries will the interest be offered, and through which route will investors buy it?
What types of investors may participate?
Who will hold the token or control the wallet?
How will subscriptions, transfers, distributions and redemptions work?
Can the administrator (the provider that runs fund records and processes), transfer agent (the provider that updates investor ownership records), custodian (the provider that safeguards assets) and technology providers support the proposed model?

The answers should guide the technology choice. Choosing a platform first can force the fund into a legal or operating model that does not fit its needs.

What should the adviser deliver?

The adviser should turn the available facts into a clear model options paper and decision matrix. The documents should:

explain each possible tokenization fund structure in plain language
show what investors would own under each option
identify the official ownership record
compare regulation, distribution, custody, transfers and redemptions
show the roles of the fund, administrator, transfer agent, custodian and technology vendors
record why each option is accepted, rejected or subject to further confirmation
recommend the model that best fits the fund and its target markets.

The recommendation should separate confirmed conclusions from assumptions and open questions. Local legal advice or confirmation from appointed providers may still be required.

What happens after the model is selected?

The next stage is fund unit tokenization model implementation. The selected model is converted into a practical blueprint covering:

changes to fund and offering documents
provider responsibilities
investor onboarding and wallet checks
ownership-register rules
subscription, transfer and redemption processes
system connections and data flows
error correction, outages and recovery
testing and launch approvals.

This order matters. It keeps the technology build aligned with the legal rights promised to investors.

Choose the legal model before the platform

Gofaizen & Sherle can help a fund sponsor compare the available models and prepare the decision framework. The firm may coordinate legal and regulatory structuring, while administration, transfer agency, custody, distribution and technology delivery may require appropriately authorised third-party providers.

To scope a model-selection workshop, provide: