Blocks | SettleMint

Fund assets digitize investment vehicles such as mutual funds, hedge funds, and alternative investment portfolios. Built for financial institutions and fund administrators, they streamline operations and enhance transparency throughout the fund lifecycle.

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What Are Fund Tokens?

Fund tokens represent ownership in pooled investment vehicles where token holders share profits and risks. They transform traditional fund shares into programmable digital assets, enabling real-time administration and greater operational efficiency.
These tokens modernize how funds are structured and managed, enforcing regulatory standards at the protocol level while automating key administrative functions. Financial institutions gain clearer visibility into transactions, while investors benefit from timely distributions and improved access to information.

Key capabilities include:

Automated fee calculation and collection
Digital investor governance and voting
NAV-based token minting and redemption
User access restrictions and regulatory controls

Benefits for Financial Institutions

Automated Distributions and Returns

Tokenizing a fund allows distributions of profits or dividends to be automated via smart contracts. When the fund earns income from interest, rent, or asset exits, the system instantly calculates each investor's share and distributes payouts based on predefined settings.

This automation removes delays typically associated with manual processing and ensures transparent, timely delivery of returns. The result is a reduced administrative burden, increased trust, and faster capital rotation for investors.

Enhanced Investor Governance

Fund tokens integrate investor governance by enabling token-based voting. Investors can participate in important decisions such as:

Extending the fund's term
Approving significant asset acquisitions
Changing fund parameters or strategies

Votes are conducted securely on-chain, ensuring all outcomes are verifiable and instantly recorded. This approach increases investor engagement and is particularly valuable for alternative investment funds, where governance rights often play a key role in attracting capital.

Real-Time Auditability

Every fund activity—contributions, redemptions, valuations, and trades are recorded immutably on the blockchain. This creates a continuous audit trail that:

Reduces the need for reconciliation between systems
Prevents manipulation or hidden activity
Assures investors that operations align with investment mandates
Auditors and regulators can be granted permissioned access to verify operations or Net Asset Value (NAV) calculations in near real-time, significantly enhancing transparency.

Core Capabilites

Fee Management

The Fund token system includes automated mechanisms for fee management. Management and performance fees are calculated in real-time based on time elapsed and assets under management.

This provides predictable, transparent, and consistent administration of fund expenses without manual involvement. All calculations and distributions are logged on-chain, supporting full auditability.

Voting and Governance

Voting and governance features are embedded to support secure investor engagement. Token holders can participate in proposals, and their voting rights are tracked automatically. The system tallies votes transparently, ensuring accurate and trustworthy governance outcomes.

These capabilities enable remote participation in key decisions while reducing the cost and complexity of corporate governance procedures. Global participation becomes easier as physical meetings are no longer required for decision-making.

Compliance and Security

Role-based access control provides operational flexibility and security. Fund administrators can control token supply, process investor onboarding, or block users when needed for compliance.

Investor onboarding workflows, including KYC and AML checks, can be integrated such that only verified investors are permitted to hold or transfer fund tokens. Transfers automatically trigger compliance validation, ensuring the fund remains within regulatory boundaries.

The token system also supports:

Programmable blocklist functionality
Comprehensive action logging for reporting
Configurable compliance rules for different jurisdictions

Use Cases

For Asset Managers

Asset managers can use fund tokens to reduce administrative overhead and focus more on investment decisions. Smart contracts handle routine tasks like fee calculations, investor communications, and regulatory reporting automatically.

This automation allows managers to accept more investors, even with smaller contributions, without increasing administrative complexity. The scalability enables new business models and investor segments previously limited by operational constraints.

For Fund Administrators

Fund administrators benefit from streamlined processes and reduced manual workloads. Cap table management, NAV calculations, and investor reporting are all simplified through the digital infrastructure.

Administrators can manage digital versions of various investment vehicles, including mutual funds, private equity funds, venture funds, and real estate investment trusts. The platform ensures consistent and accurate record-keeping across all fund activities.

For Investors

Investors receive more timely information, faster distributions, and greater participation in fund governance. The transparency of blockchain operations builds trust in fund management and provides clear visibility into investment performance.

If enabled, peer trading of tokens can provide liquidity options not typically available in traditional fund structures, giving investors more flexibility in managing their portfolios.

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Why Choose Tokenized Funds?

Fund tokens represent a foundational shift in how investment vehicles can be built, managed, and scaled in the digital era. By integrating programmable logic, role-based controls, and secure governance tools, they help institutions:

Modernize fund administration through automation
Reduce operational costs and errors
Improve investor confidence through transparency
Scale operations without proportional increases in overhead
Maintain strong compliance with regulatory requirements

The security and transparency benefits extend to all stakeholders, creating a more efficient and trustworthy investment ecosystem.

Start Building with Fund Tokens

The Asset Tokenization Kit provides everything needed to issue, manage, and trade fund tokens with institutional-grade security and compliance.

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