Research indicates that tokenizing private funds could reduce operational costs by around 23%, with even small shifts of assets onto blockchain generating substantial annual savings, such as approximately £78 million from a 5% transfer of UK private fund assets.

The platform's first transaction involved MembersCap, acting as the general partner of MCM Fund 1, executing a primary fundraise with the support of a Web3 foundation through Archax.

Private funds are currently the first asset class to be live on DMI, with plans to expand to other asset classes in the future, signaling a significant shift in private market transactions.

The London Stock Exchange Group (LSEG) has launched a new blockchain-based platform called Digital Markets Infrastructure (DMI), built on Microsoft Azure, to improve efficiency and scalability across the entire lifecycle of private fund assets.

The UK’s blockchain finance sector is experiencing rapid growth, with tokenization revenues reaching approximately $284 million in 2024 and projected to grow to about $929 million by 2030 at an annual growth rate of over 18%, according to industry research.

This growth is driven by increasing demand for faster, more secure financial transactions facilitated by blockchain technology, aligning with broader trends of traditional financial institutions adopting these innovations.

The development of DMI supports the broader trend of financial institutions integrating blockchain to enhance asset management, trading processes, and support a wide range of financial instruments including equities, debt securities, and derivatives.

UK regulators, especially the FCA, are actively developing a digital securities framework and supporting fund tokenization, which has encouraged financial institutions to experiment with tokenized instruments, positioning the UK as a leader in blockchain finance.

This initiative aligns with government policies, including the FCA’s approval of trading venues like PISCES and the removal of stamp duty on private market trades, reducing friction in private transactions.

Early efforts by major institutions like Goldman Sachs and BNY Mellon, with tokenized cash products totaling about $7.4 billion, illustrate ongoing efforts to standardize workflows and improve collateral mobility through blockchain.

LSEG’s head of digital markets infrastructure, Darko Hajdukovic, emphasized that the platform significantly enhances workflows, liquidity, and connectivity in private markets, demonstrating strong client interest in a regulated, interoperable DLT infrastructure.

The growing relevance of digital assets is highlighted by Bitcoin trading at $114,900, up 23% this year, reflecting increasing institutional interest in cryptocurrencies.

The platform is designed for regular financial transactions, not cryptocurrencies, aiming to improve efficiency, reduce costs, and accelerate asset trading and management processes.