Tokenized Funds Get Faster Exit with Fission Platform

A startup backed by Pantera Capital has developed a system that enables investors to quickly cash out of tokenized funds, bypassing lengthy wait times.

The liquidity problem persists even as fund shares are converted into digital tokens using blockchain technology. Investors often must wait months for a buyer to emerge, leaving their assets idle. This can be frustrating for those who need quick access to their money.

Fission, founded in 2024 by CEO Jonathan Shaffer and his team, has raised $10 million in Series A funding to address this issue. The round was led by Pantera Capital and closed in September with the participation of several other investors.

The startup's platform connects investors' digital wallets directly to a pool of buyers, allowing for near-instant sales. Fission handles the complex process of buying and selling tokenized fund shares on behalf of its users.

Investors can now sell their holdings through Fission's platform in as little as 90 seconds, according to CEO Jonathan Shaffer, who noted that traditional sales can take up to six months.

Tokenization has become increasingly popular among asset managers as they digitize their fund shares and investment products on blockchain ledgers. This trend is evident in the recent moves by major players such as BlackRock, which expanded its lineup of tokenized money market products in August.

JPMorgan's asset management arm has also been actively promoting tokenization, launching its second tokenized money market fund for U.S. investors in May. The growing interest in tokenization is not limited to product offerings; it also extends to brokerage distribution channels.

Pittsburgh-based investment manager Federated Hermes has announced a partnership with Prometheum this month to offer tokenized funds through brokerages, with the first product expected to be launched early next year. This development is expected to bring tokenized products closer to mainstream investors.

Despite the growing momentum around tokenization, liquidity remains a significant challenge. In June, InvestaX reported that most investors in tokenized private-credit products were either putting money into or withdrawing from the funds, rather than selling their holdings to other buyers.

Firms have made rapid progress in creating digital tokens but have struggled to establish markets where investors can sell them to one another. This is a critical issue that needs to be addressed if tokenization is to reach its full potential.

The post-tokenization problem, as described by Franklin Bi, general partner at Pantera Capital, is an area of focus for Fission and its founders. They have firsthand experience with the issue, having encountered it while working on Wall Street.

Fission's platform is designed to cater to institutional investors and organizations that hold assets on blockchains. This includes U.S. and overseas hedge funds with tokenized private-credit or equity holdings, as well as crypto organizations managing their treasuries and stablecoin issuers keeping reserves in tokenized investments.

The startup has secured a total of $10 million in funding, following a previous round of investment totaling $1.6 million led by SALT Fund and Kraynos Capital. Existing investors, including New Form, gumi Cryptos Capital, Anthony Scaramucci, Manhattan Venture Partners, Reflexive Capital, and Lattice Capital, have also continued their support for the company.