Private credit may be the breakout use case for tokenization: Maple's Sidney Powell

While much of the hype around tokenization has centered on treasuries and money market funds, Maple Finance CEO Sidney Powell thinks tokenized private credit will be the real growth story.

Tokenization refers to the process of representing real-world assets, such as stocks, bonds, loans, or commodities, as digital tokens recorded on a blockchain.

Private credit already has a structural growth trend in traditional finance, as banks struggle to fund these loans and non-bank shadow lenders, private equity firms and credit managers like Apollo, step in. Even after high-profile blowups and claims that private credit is a bubble, Powell, who is speaking at CoinDesk's Consensus Hong Kong conference next month, said he expects the asset class to continue expanding.

Tokenization has already gained traction in money market funds, which have emerged as one of the earliest real-world asset use cases on blockchain. Asset managers including BlackRock and Franklin Templeton have launched tokenized funds that mirror traditional cash-management products while using blockchain rails for settlement and recordkeeping. These onchain funds offer investors exposure to short-term government debt with daily liquidity, while showcasing how tokenization can streamline operations and expand distribution, even if the underlying assets and market structure remain largely unchanged.

By converting traditional assets into programmable, onchain instruments, tokenization can enable faster settlement, increased transparency and fractional ownership, he said. Proponents argue the approach could modernize financial markets by making assets more accessible and easier to trade across borders, while critics note that regulatory clarity and infrastructure remain key challenges.

Powell argued private credit is almost tailor-made for tokenization. It is largely an over-the-counter, bilateral market, with deals that don’t trade on exchanges and often aren’t transparently reported. Selling these loans can be difficult because liquidity is limited and price discovery is opaque.

“That’s exactly the sort of market where tokenization makes sense,” Powell said in an interview with CoinDesk. Markets where information is fragmented and assets are hard to move. Putting private credit onchain can make these markets more transparent, broaden the investor base and reduce friction in secondary trading.

By contrast, the marginal benefit of tokenizing equities is smaller, Powell suggested, because brokerage costs have already collapsed to near zero with commission-free platforms. Tokenized funds can help with distribution, but they’re not solving the same fundamental opacity and liquidity problems private credit faces.

Onchain defaults as a feature, not a bug

Powell also expects the first high-profile onchain credit default to hit in the coming years. Rather than seeing that as an indictment of decentralized finance (DeFi), he argued it will showcase the strengths of auditable, blockchain-based systems.

Defaults are a normal feature of credit markets, not a bug, he noted. The difference onchain is that the entire lifecycle of a loan is transparent, from origination to repayment or default. In cases like double-pledging receivables, tokenization can ensure there is effectively “one set of tokens” representing the asset pool, which makes it harder to commit fraud.

These failures are a routine but often opaque feature of private credit markets, where problems can surface late and spread quickly. First Brands' collapse is a case in point. The auto parts maker filed for Chapter 11 bankruptcy protection in September 2025 after failed refinancing efforts and the discovery of complex, undisclosed off-balance sheet liabilities that accelerated its debt spiral, hitting a range of private lenders.

Because many private credit deals are negotiated bilaterally and are lightly reported, investors frequently lack clear visibility into leverage, collateral quality or ultimate risk exposure, a structure critics say makes stress harder to detect until it becomes unavoidable.

“Even when defaults occur, doing this onchain goes a long way toward mitigating the risk of fraud,” Powell said.

He said he believes that as more onchain lending develops, crypto-backed loans will eventually receive ratings from traditional agencies, potentially by the end of 2026. Once these instruments are rated, they can be syndicated into the mandates of mainstream fixed-income investors, turning them "from good quality to investment grade assets” according to the same frameworks that govern corporate and sovereign credit.

Macro backdrop and bitcoin

On the macro side, Powell tied inflation and government debt dynamics to a bullish case for bitcoin. With tens of trillions of dollars in sovereign debt and political difficulty around passing balanced budgets, governments are left with taxation or inflation as primary tools. Inflation, he notes, is effectively a tax on purchasing power, and that environment supports the case for BTC as an asset with a fixed supply.

He also points to efforts by policymakers to streamline regulation and increase the supply side of the economy as part of the fight against inflation, but sees the the structural debt overhang as a continuing tailwind for hard assets.

The hunt for yield

Looking ahead, much of this debt, he said he believes, will be bought by large traditional institutions: pensions, endowments, insurers, asset managers and sovereign wealth funds; simply because they control the largest balance sheets and must find yield wherever it emerges.

Read more: Wall Street integration will power crypto’s next phase, says Fidelity Digital Assets