Private markets as collateral: what tokenisation can change, and what it cannot

Why this matters now

Private credit has grown to an estimated $1.5–2.0 trillion of non-bank direct lending, concentrated in the US, the euro area and the UK [1]. Counting private equity and other strategies, private market funds manage around $16 trillion, of which around $4 trillion is committed by investors but not yet drawn [2]. Insurers and pension funds supply around 75–80% of the capital [2].

For those investors, a fund interest is a large asset that is hard to use. It cannot usually be redeemed, it needs consent to transfer, and it is valued once a quarter. When cash is needed, the choice is often a secondary sale at a discount or a wait.

The pressure became visible in 2026. In the US, semi-liquid private credit funds mostly cap redemptions at 5% of NAV a quarter. In the first quarter many received requests well above that, and accepted redemptions exceeded inflows for the first time since these vehicles were created [4]. The Bank of England is now running a system-wide stress exercise on private markets with 46 institutions, with interim findings due later in 2026 and a final report in 2027 [3] [5].

This is the same problem we described for money market funds: a widely held asset that cannot easily be posted, recalled or reused. The difference is that a money market fund holds liquid assets. A private fund does not.