(Bloomberg) -- ParaFi Capital, a New York-based digital asset manager that includes KKR & Co. co-founder Henry Kravis among its backers, is tokenizing a minority portion of its latest venture-capital fund, which closed in May.
The LP interest will be available on the Securitize platform, and run on the Avalanche blockchain — both projects that ParaFi is an investor in. This is the first step toward more tokenization activity across the $1.2 billion firm, Ben Forman, founder of ParaFi, said in an interview.
“We decided we want to eat our own dog food,” Forman said. “We are investors in this technology, but we didn’t just want to invest in the tokenization infrastructure, we wanted to use it ourselves.”
Various firms have tried to tokenize everything from fiat to stocks and bonds for years, but outside of so-called stablecoins — coins typically backed by fiat — activity has been slow to pick up. There are signs of acceleration of tokenization activity, however. Last year, JPMorgan Chase & Co. had gone live with its first collateral settlement for clients using blockchain. Franklin Templeton and BlackRock have tokenized funds.
There are several drivers of the recent acceleration of activity: More crypto custody options have become available, and using blockchains has become cheaper. Verifying that buyers and sellers adhere to know-your-customer and anti-money-laundering requirements has become simpler as well, Forman said.
“We’ve probably seem more interest and activity in tokenization space in the last year than in the prior years combined,” Forman said.
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