Private Credit Is Having a Moment
The $3 trillion private credit market is evolving. As institutional investors search for yield beyond public markets, private credit is becoming a core part of fixed income strategies. Now, private credit tokenization is emerging as a way to modernize how these assets are accessed, managed, and distributed.
At IXS - the institutional exchange settlement layer for institutional real world assets (RWAs) - we provide the settlement and exchange rails that make tokenized private credit accessible, scalable, and built for institutional adoption.
In this article, we explore what’s driving the shift and why tokenized private credit is gaining traction with institutional allocators.
Tokenized Private Credit in Numbers
Tokenized private credit has been the largest category of tokenized real-world assets (RWAs) on-chain with $15.67B active loan value on-chain as of Aug 2025. Borrower categories range from fintech lenders and SME portfolios to structured credit strategies.
What Is Tokenized Private Credit?
At its core, tokenized private credit refers to representing ownership in private loans or credit instruments through digital tokens on a blockchain.
The underlying loan or credit exposure remains off-chain, legally structured and regulated the same way it would be in traditional markets. But the ownership claim or entitlement to returns is represented on-chain in the form of a token. These tokens can then be issued, traded, and settled more efficiently using blockchain infrastructure.
How private credit tokenization typically works:
- An originator structures a private credit product, often SME loans, structured credit, or asset-backed finance.
- A legal wrapper is created to hold the exposure.
- A digital token is minted to represent ownership or rights to cash flows from that credit.
- Investors subscribe using fiat or stablecoins and receive yield in return.
- The loan continues to perform off-chain, but payments and investor reporting are managed on-chain.
Real-World Use Cases of Tokenized Private Credit
Private credit tokenization is already happening across global regions and sectors. Some highlights include the below.
- Financing SMEs in Developing Markets
Mikro Kapital ALTERNATIVE eNote™ is a tokenized fixed-income instrument. It channels capital into microfinance and SME lending across emerging economies, while offering investors access to diversified private credit strategies with a target return of up to 9.5% p.a.
This structure combines yield with purpose, backed by an established credit portfolio and accessible through regulated infrastructure.
- Supporting Global Trade Through Short-Term Lending
TradeFlow Tokenized Trade Finance Bond is a tokenized instrument backed by short-term commodity trade finance. It allows capital to flow into short-term, insured commodity trade transactions, while offering investors up to 8.5% p.a. in returns.
The product features short tenors (max 90 days), regular income, and built-in transparency delivered through a streamlined, tokenized structure.
- Enabling Emerging Market Lending with On-Chain Distribution
Goldfinch is a decentralized credit protocol serving fintechs in emerging markets. Goldfinch has surpassed $100 million in active loans across 20+ countries, without requiring on-chain collateral from borrowers. It's a strong example of credit risk being priced and managed off-chain, but access and returns being tokenized for investors.
- Financing small businesses
Jia launched a $100K tokenized lending pool via Huma Finance to extend loans to 500+ small businesses across Africa and Asia, showcasing how blockchain-based private credit can serve inclusive finance goals at scale.
These examples show that tokenized private credit serves the same core purposes as traditional credit, such as SME lending, trade finance, and emerging market support. The difference lies in delivery. On-chain structures expand investor access, boost transparency, and streamline operations. These efficiencies can translate to better access and potentially higher returns for investors.
A Two-Sided Value Proposition for Issuers and Investors
For Issuers: Efficiency and Reach
Tokenization of private credit provides a digital-native way to scale issuance, automate operations, and expand the investor base.
Key benefits:
- Global Distribution, Smaller Check Sizes: Tokenized offerings make it possible to tap into global demand, fractionalize credit exposure, and reduce the minimum ticket size for participation, broadening access to capital.
- Automated Compliance & Reporting: Smart contracts enable built-in controls for whitelisting, investor verification, and jurisdictional restrictions. Ongoing reporting, cash flow tracking, and audit trails are streamlined.
- Faster Time-to-Capital: Issuance (see diagram below for reference), settlement, and capital disbursement can happen more efficiently with fewer intermediaries, reducing drag in the lending cycle.
For Investors: Access and Yield
Institutional capital is actively hunting for yield. Tokenized private credit offers exposure to familiar, higher-return assets, delivered through a modern, digital wrapper.
Key benefits:
- Exposure to Real Yield: The efficiencies that tokenization brings can potentially reduce costs and can translate into higher yields for investors. As of July 2025, tokenized private credit products on-chain average ~10.16% in borrower yields - well above most tokenized treasuries (~4.1%). This offers institutions the ability to diversify and pursue risk-adjusted returns.
- New Access Points to Private Markets: Historically reserved for larger funds or bespoke mandates, tokenized credit structures make it possible for more investors to access private lending strategies with clearer terms and simplified onboarding.
- Better Liquidity Options: While still an evolving space, some platforms (e.g. Maple, Centrifuge, Goldfinch) now support secondary markets for tokenized credit, improving exit flexibility for investors. IXS decentralized exchange (DEX) extends this further by providing compliant secondary liquidity for credit tokens.
What to Watch: Risks and Realities
The foundations are forming and early movers are gaining traction. Yet, tokenized private credit isn’t a silver bullet and it’s not without challenges.
- Credit Risk Remains: The underlying credit exposures still carry risk. Due diligence, underwriting, and counterparty evaluation remain critical.
- Liquidity Still Developing: While tokenization improves the potential for liquidity, secondary markets for private credit tokens are still maturing.
- Regulatory Complexity: Legal clarity varies by jurisdiction. Not all private credit structures are easy to tokenize, and custody, disclosure, and investor protections must be considered carefully.
These challenges require thoughtful structuring, jurisdictional awareness, and platform selection. For institutions, working with regulated RWA platforms like IXS, verified counterparties, and transparent legal wrappers can help mitigate risk while participating in the early stages of a maturing market.
Final Notes
Tokenized Treasuries may be the institutional on-ramp. But private credit is increasingly viewed as the next step on the path to yield-oriented tokenization.
For issuers, it’s a way to modernize lending workflows and scale distribution. For investors, it provides access to higher-yield, real-world credit strategies delivered through a more flexible and transparent structure.
IXS’s licensed settlement infrastructure is designed to enable private credit to operate on-chain, helping bridge the $3 trillion market with the compliant architecture required for institutional scale.
Looking to bring private credit on-chain, or an institution seeking new yield access points? Contact the IXS team to get started.