DigiFT to Launch Tokenized AI Stock Fund with On-Chain Transparency

DigiFT, a smart contract-based digital asset exchange, is set to introduce a new tokenized fund consisting of AI-related stocks. This initiative builds on the platform’s existing partnerships with leading asset managers like UBS and Invesco, which have used the exchange to tokenize and distribute funds to accredited and institutional investors. The upcoming AI stock fund is expected to include major technology firms such as Nvidia, Apple, Microsoft, Tesla, and Alphabet, with the stocks themselves being tokenized to ensure seamless on-chain integration.

Hash Global is anticipated to be the first asset manager to collaborate with DigiFT on this project. The collaboration involves two tokenized funds, one of which is the DigiFT Hash Global AI Index Fund. This move marks a significant step toward the adoption of blockchain technology in traditional financial markets.

Enhancing Liquidity and Transparency Through Tokenization

DigiFT’s CEO emphasized that tokenizing both fund shares and the underlying assets can transform asset management by introducing unparalleled liquidity, transparency, and accessibility. By bringing real-world equities on-chain, the process eliminates traditional inefficiencies and enhances visibility for institutional investors. The blockchain-native environment allows for greater operational simplicity, reducing the reliance on intermediaries.

The fundamental advantage of this approach lies in its ability to streamline asset management. Rather than navigating through brokerages and custodians, managers can oversee operations entirely on-chain, resulting in faster and more efficient fund administration.

Automation in Asset Management

Currently, fund issuance and redemption involve cumbersome processes managed by authorized participants (APs). In the US, large financial institutions like Bank of America, Goldman Sachs, and JP Morgan handle the majority of ETF issuances and redemptions. APs are responsible for delivering underlying stocks to asset managers in exchange for ETF units, which are subsequently sold on secondary markets.

Tokenizing the underlying stocks presents a transformative solution. With significant demand, smart contracts could facilitate the issuance of new fund shares by automatically acquiring tokenized stocks. This automated process would further enhance transparency, allowing investors to verify the fund’s holdings directly on-chain via the fund’s wallet.

Calastone, a UK-based fund distribution platform, has long advocated for comprehensive tokenization that includes both fund units and the underlying assets. This approach maximizes operational efficiency and supports more dynamic portfolio management. Fund structures could become more adaptable, offering tailored solutions to investors based on their specific preferences.

Targeting the Web3 Investor Market

DigiFT’s tokenized AI stock fund is likely to appeal to Web3 investors, including corporate treasuries, large-scale crypto holders, and digital asset managers. While money market funds have already seen considerable participation from these sectors, the new AI-focused fund may diversify investment opportunities.

Despite the innovative prospects, certain concerns remain. Hash Global’s decision to maintain team anonymity and its absence of regulatory licensing in a major jurisdiction may raise questions among potential investors. Nevertheless, some information on the firm’s key partners can be identified through further investigation.

As tokenization gains traction, DigiFT’s initiative underscores a growing shift towards blockchain-powered financial ecosystems. By automating fund management, enhancing transparency, and expanding investment options, this approach could redefine traditional asset management and pave the way for broader adoption of tokenized financial instruments.