Original Article Title: Wall Street Legend on the Future of Finance

Original Source: Anthony Pompliano

Compiled and Translated By: lenaxin, ChainCatcher

Since the beginning of the year, many traditional institutions such as Hong Asia Holdings, Australia Monochrome, BlackRock, Fidelity, Bitwise, ARK Invest, Japan Metaplanet, Value Creation, Palau Technology Corporation, Brazil Meliuz, Franklin Templeton, US stock Dominari Holdings, asset management company Calamos, and game retailer GameStop have started to position themselves in Bitcoin. They have accelerated cryptocurrency allocation through fundraising, ETF accumulation, bond financing, corporate reserves, and other forms.

This article is a video interview of Hamilton Lane's Co-CEO, Erik Hirsch, by Anthony Pompliano, focusing on the following three core topics:

·  Why has this 50-year-old traditional financial giant accelerated its positioning in the blockchain space?

· How does it achieve a dynamic balance between technical innovation breakthroughs and strict regulatory compliance?

· What is the underlying strategic logic behind investing heavily in tokenized funds?

Hamilton Lane is a globally leading private markets investment management firm founded in 1991, headquartered in the US, with nearly a trillion dollars in assets under management. The company specializes in alternative asset investments such as private equity, credit, real estate, providing full-cycle asset allocation solutions for institutional investors (such as sovereign wealth funds, pension funds, insurance companies, etc.). In recent years, Hamilton Lane has actively positioned itself in the blockchain and asset tokenization space, driving liquidity transformation in the private markets and promoting inclusive finance through technological innovation, becoming one of the representative institutions in the traditional finance's transition to digitalization.

As the head of a global private equity investment giant managing nearly a trillion dollars in assets with over 800 employees, Erik Hirsch has been deeply involved in asset allocation and innovative investments for over two decades. His unique insights are highly regarded in the industry. Mr. Erik Hirsch's strategic choices have, in fact, dropped a depth charge into the entire traditional financial system. When the architects of industry rules actively embrace disruptive innovation, what does this cognitive paradigm shift signify in terms of a historic turning point? The industry transformation landscape hidden behind it is worth our in-depth analysis together.

Erik's Key Points:

· I believe we have no choice; the trend of global digital asset adoption is now irreversible.

· The complexity of the current market environment has surpassed conventional uncertainty and is exhibiting a dynamic evolution of multidimensional market turbulence.

· From the perspective of asset allocation theory, the limitations of the traditional '60/40 stock-bond allocation model' have become fully apparent.

· The private capital sector is particularly exposed to a liquidity crunch: primary market financing is at a historic low.

· The logic of capital allocation is undergoing a fundamental transformation: investors will seek cross-asset class diversification returns by bearing a liquidity premium cost. This trend is not a cyclical adjustment but a paradigm shift driven by market microstructure changes.

· Under the geopolitical economic game framework, the tariff variables have significant uncertainties in terms of policy impact depth and time dimension, leading to a paradigm pressure on asset valuation systems.

· The risk hedging path for gold and Bitcoin investors, although belonging to different value systems, exhibits a high degree of underlying logic convergence in their allocation motivations.

· Tokenization technology is more suitable for scenarios with characteristics of sustainability.

· I fully agree that we should abandon the traditional binary opposition classification framework.

· Tokenization is fundamentally an asset digitalization and rights empowerment tool, and its compliance framework is no different from traditional securities-based assets.

· Whether tokenization technology can trigger a paradigm revolution in the private equity fund industry depends on whether capital truly recognizes the value proposition of this liquidity restructuring.

· In our strategic choices, we are inclined to maximize the boundaries of tokenization applications, continuously deepen product innovation, and promote investor education.

· As the market evolves towards a perpetual mechanism, tokenization technology will significantly optimize transaction efficiency.

· Financial history repeatedly confirms that any innovation with a customer cost advantage will eventually break through institutional inertia.

Strategic Layout to Address Global Uncertainty: Disruptive Strategies from an Authoritative Perspective

Anthony Pompliano: In the macro paradigm of global economic and investment fields displaying nonlinear volatility characteristics, as a decision-maker managing nearly a trillion-dollar asset scale with multi-regional resource allocation capabilities, how do you systematically construct a strategic decision-making framework to address the structural evolution of the market environment? Especially in the context of deepening cross-border resource allocation and continuous expansion of the investment landscape, how do you achieve dynamic equilibrium between strategic stability maintenance and tactical adaptation?

Erik Hirsch: The complexity of the current market environment has surpassed the realm of conventional uncertainty, exhibiting the continuous dynamic evolution of multidimensional market turbulence. This systemic volatility has posed a challenge akin to solving an overdetermined system of equations, breaking through the analytical boundaries of traditional statistical models due to the interaction among variables. Observing institutional fund flows reveals that the majority of top-tier investors are adopting a strategic defensive posture, compressing risk exposure to await the explicit delineation of the market's long-short game equilibrium point.

The realm of private capital is particularly exposed to a liquidity tightening trend: primary market financing has experienced a historic contraction, the corporate M&A restructuring process has entered a phase of stagnation, and all parties involved in transactions are widely undergoing a reassessment cycle of systemic risk margins. Under the geopolitical economic game framework, the tariff variables are characterized by significant uncertainty in both the depth parameters of policy impact and the time dimension, leading the asset valuation system to face pressure for a paradigm shift.

Anthony Pompliano: The current capital market pressure has transcended a mere value correction dimension, as the pricing mechanism and liquidity transmission system exhibit deeply coupled characteristics. At a special stage where the market friction coefficient surpasses a critical value, the systemic strengthening of the flight-to-safety effect has led to a structural aggregation of funds into cash-like assets, causing the correlation coefficient across asset classes to approach the threshold of full positive correlation.

Regarding the significant increase in institutional investors' private equity allocation weight in recent years, the sustainability of this trend faces a dual examination: will the adjustment pressure on this allocation weight stem from the market's repricing of private equity asset liquidity discounts, or from the institutional investors' ability to fulfill their long-term commitments based on a cross-cycle allocation philosophy? It is noteworthy that when the volatility cycle parameter breaches the ten-year confidence interval of traditional models, does the duration mismatch risk hedging mechanism under the "through-the-cycle" investment philosophy retain theoretical consistency?

Erik Hirsch: From the perspective of asset allocation theory evolution, the historical limitations of the traditional "60/40 stock-bond allocation model" have become fully evident. This model, as a benchmark paradigm in the retirement savings sector, with its core theory of a 60% equity and 40% fixed income asset combination ratio, is essentially a product of path dependency from a specific historical period. Even after stripping away geopolitical friction variables, the applicability of this model in today's market environment faces a dual challenge: the sustained increase in public market volatility parameters and the unprecedented market centralization features.

It is worth noting that the current phenomenon of the dominance of the top seven constituent stocks in the market (the top seven constituents of the S&P 500 Index accounting for 29%) did not exist in the market structure 15-20 years ago. Historical analysis shows that although there was industry concentration at that time, there was no extreme scenario where the fluctuation of individual constituent stocks was sufficient to trigger systemic risk transmission. This oligopolistic market structure is fundamentally at odds with the core concept of the 60/40 model, which is based on passive tracking strategies and fee minimization principles, while the current market's microstructure results in the increasingly apparent structural flaws of passive investment strategies.

Based on this, the logic of capital allocation is undergoing a fundamental transformation: Investors will acquire diversified returns across asset classes by bearing liquidity premium costs. This trend is not a cyclical adjustment but a paradigm shift driven by market microstructure evolution.

Anthony Pompliano: When you start each trading day in a highly uncertain market environment, how do you determine your decision-making direction? Specifically, how do you construct your investment course based on the core data indicators you monitor daily?

Erik Hirsch: In the global information flow systemic integration at five o'clock every morning, the current market environment exhibits paradigm shift characteristics: The pricing weight of the news cycle has surpassed traditional macroeconomic indicators. Decision focus is on three non-traditional variables: the release of significant geopolitical declarations, substantial restructuring of international relations architecture, and the escalation risk of sudden conflicts. These factors are reshaping the mechanism for market volatility generation.

Viewing the market system as a nonlinear dynamic system, its operational characteristics resemble turbulent river flow: Investors cannot intervene in flow rate parameters or alter the distribution pattern of river obstacles. The core function of institutions is dynamic path optimization, achieved through a risk premium compensation mechanism to mitigate systemic risk. Therefore, News cycle analysis constitutes the first principle of the decision-making framework.

The second dimension focuses on microbehavioral trajectories: Based on the U.S. consumer-driven economic model, a real-time monitoring system for high-frequency consumer behavior indicators (such as dining industry consumption frequency, air passenger index, culture and entertainment service expenditure) needs to be constructed. Such behavioral data forms the a priori fluctuation factor of the consumer confidence index.

The third dimension analyzes the enterprise-side signaling network: Key areas to track include the asymmetric volatility of industry confidence indexes, the marginal contraction of fixed asset investment, and the structural differentiation of profit quality. The above indicators constitute a multifactor validation system of economic fundamentals. Only through orthogonal verification of consumer-side and enterprise-side data can one penetrate the noise interference in the market microstructure and form a robust decision-making basis.

Bitcoin and Gold's Safe Haven Logic Reconstruction

Anthony Pompliano: The price of gold recently broke through historical highs, with this asset class achieving its best return curve in 2023 and continuing its strong momentum in 2024. The driving factors in the traditional analysis framework are attributed to central bank balance sheet restructuring (gold purchases) and the superimposed effect of uncertainty premium compensation demand. However, it is worth noting that Bitcoin, endowed with the attribute of "digital gold," is exhibiting a concurrent excess return feature. These two asset classes have shown a significant negative correlation over the past decade but have constructed an asymmetric hedging portfolio in the current macro volatility upsurge period.

It should be noted that although your organization's portfolio is primarily allocated to illiquid assets, high liquidity assets such as Bitcoin and gold still hold special research value. When evaluating the strategic asset allocation model, is the pricing signal of such heterogeneous assets decision-effective? Specifically: Does the trajectory of central bank gold reserve changes imply the reset expectation of the global monetary anchor? Does the movement in Bitcoin's implied volatility parameter reflect a structural shift in the market risk premium compensation mechanism? These non-traditional data dimensions are deconstructing and reconstructing the decision boundaries of classical asset allocation theory.

Erik Hirsch: While the risk hedging path of gold and Bitcoin investors belongs to different value systems, their allocation motivations exhibit a high degree of underlying logic convergence, both seeking to establish an uncorrelated asset cushion mechanism amidst macroeconomic fluctuations. A deep dive into their value logic core:

The core proposition of the Bitcoin enthusiast community is rooted in the decentralized nature of crypto assets, believing that the independent value storage system built on blockchain technology can achieve hedging through a decoupling mechanism from the traditional financial system. Gold investors follow the classical credit paradigm, emphasizing the deterministic premium of the physical scarcity of precious metals in extreme market conditions.

The distribution of fund flows reveals significant intergenerational differentiation features: institutional investors continue to increase their allocation to traditional tools such as gold ETFs, while individual investors are accelerating the transition to cryptocurrency assets. This allocation difference maps the cognitive paradigm gap of two generations of investors regarding safety margins, with traditionalists adhering to the physical credit anchoring logic and the new generation advocating the anti-censorship feature of digital assets. However, both reach a consensus at the strategic objective level: by allocating to assets with a systemic risk beta coefficient close to zero, they construct a capital safe haven during macro turbulence.

Institutional Decision Logic in the Tokenization Process

Anthony Pompliano: Many viewers may be surprised that as a respected figure in the institutional investment field, your focus is not primarily on topics such as cryptocurrency, gold, and stablecoins. Over the past decade, with the rise of crypto assets and tokenization technology, what decision framework has your organization developed in balancing participation boundaries and observation distance? Specifically, in the wave of financial infrastructure digitalization restructuring, how do you define the innovative areas that require deep involvement and the risk zones that need to be cautiously avoided?

Erik Hirsch: Hamilton Lane has always positioned itself as a provider of private market solutions, with its core mission being to assist investors of different scales and types in accessing the private markets. The global private markets are currently large and diverse, covering various asset classes, geographic distributions, and industry tracks, giving us a panoramic market insight capability. It is worth noting that our client base is predominantly institutional investors, including the world's top sovereign wealth funds, commercial banks, insurance institutions, endowments, and foundations. In the process of practicing this philosophy, we continuously provide strategic guidance and trend analysis to investors by building a broad client network and deep market understanding.

Based on this, we always require ourselves to have panoramic economic variable analysis capabilities. In terms of the tokenization innovation wave, although Hamilton Lane, as a traditional institutional representative managing nearly a trillion dollars in assets, its strategic choices may seem to be in tension with emerging technologies. However, in essence, we firmly support the asset tokenization transformation. This technological path can not only significantly improve asset allocation efficiency and reduce transaction friction costs, but also achieve the essential simplification of complex financial services through the standardization process restructuring. This deeply aligns with our core value of 'simplifying the complex'.

Anthony Pompliano: We have noticed that your institution is advancing multiple strategic layouts, which we will discuss further. However, when initially focusing on tokenization technology, has your company already formed a clear view? In the broader global financial system, in which areas will tokenization technology first be implemented? Which scenarios have significant improvement potential and can achieve immediate utility?

Erik Hirsch: Currently, tokenization technology is more suitable for scenarios with sustainability characteristics. In the traditional private placement market system, most private equity funds use a drawdown model, with capital only called upon as needed. However, the industry is rapidly moving towards a sustainable fund structure, whose operational logic is closer to the normalized investment model of mutual funds or ETFs: dynamic position adjustments without investors having to go through repeated capital call processes.

As the market evolves towards a sustainable mechanism, tokenization technology will significantly optimize transaction efficiency. I often liken it to this: Private equity funds, as an asset class with over fifty years of history, have always prided themselves on technological innovation (especially in the venture capital field), but their operating models have remained stagnant, like customers still checking out at a traditional grocery store, painstakingly verifying payee information when writing a check. In contrast, tokenization technology is more like Apple Pay's instant payment system, with its core value in: replacing traditional paper processes with digital protocols, upgrading the private placement market's subscription-based trading model to an automated system that is just a click away.

Anthony Pompliano: Your institution not only has technological awareness and strategic foresight but has also entered the implementation stage. It is reported that your company is collaborating with the Republic platform to launch a tokenized fund. Could you explain the formation path of this strategic decision? How was the investment logic framework of this fund constructed?

Erik Hirsch: Hamilton Lane has implemented its strategic commitment through its balance sheet capital, directly investing in and holding stakes in multiple compliant digital asset trading platforms. These institutions are located in different jurisdictions and have different investor service systems. Although they are currently in the ecosystem development period, we have completed the infrastructure layout through strategic partnership alliances, issuing dozens of funds through tokenization on cross-border multi-platforms, significantly reducing the participation threshold for qualified investors.

The recent collaboration case with the Republic platform is paradigmatic: the product issued this time has lowered the minimum investment amount to $500, marking a historic breakthrough in the private placement asset access mechanism from serving ultra-high-net-worth individuals to a direction of universal inclusion. This move not only fulfills the promise of technological innovation but also realizes the value reshaping of asset class democratization, breaking the long-standing allocation pattern monopolized by large institutions and the top wealth class. We firmly believe that unlocking the liquidity premium of the private placement market through tokenization technology, building an inclusive financial ecosystem for universal participation, is not only a matter of social equity but also a strategic choice for the industry's sustainable development.

Divergence in Strategy Between Retail Investors and Institutional Investors

Anthony Pompliano: Non-professional observers in the financial field may not yet fully recognize the structural paradigm shift in the current market perception: the traditional context of the concept of 'retail investors' has long implicitly implied a hierarchical discrimination of ability level, where institutional funds are defaultly considered professional investors, and individual capital is seen as an irrational presence. This cognitive framework is undergoing a fundamental deconstruction: today, top asset management institutions are increasingly seeing retail investors as strategic service recipients, driven by the public's declining trust in traditional wealth advisor channels and the resonance of financial democratization demands.

In this context, the groundbreaking fund product launched by your company has achieved direct reach to end investors, leading to key strategic considerations: are there paradigm differences in investment strategies tailored to sovereign wealth funds, public pension funds, and other institutional clients, and those adapted for self-directed investors? In dimensions such as risk-return characteristics, liquidity preferences, and information transparency requirements, how can a differentiated value delivery system be built?

Erik Hirsch: This insight is highly valuable, and I fully agree that we should abandon the traditional binary classification framework. The core issue is: whether institutional investors or retail investors, they fundamentally seek high-quality investment tools that align with their objectives, rather than simply being labeled as 'professional' or 'non-professional.' From a historical perspective, it is clear that the public stock market is more advanced in terms of innovative evolution, from the early stock picking model relying on stockbrokers, to the rise of mutual funds, and then to the fine-grained strategy layering of ETFs, this ladder-like innovation precisely points the way for the private placement market.

Currently, we are driving the industry's transition from a single closed-end fund to a perpetual fund structure, achieving allocation flexibility through multi-strategy portfolios. It needs to be clarified that the investment strategy itself does not undergo a fundamental difference due to customer type. Taking our infrastructure investment in partnership with Republic as an example, covering global projects such as bridges, data centers, toll roads, and airports, these kinds of assets meet the long-term allocation needs of institutional clients and also satisfy the return expectations of individual investors. The real challenge lies in: how to design the optimal vehicle solution for different capital attributes (size, duration, liquidity preferences). This is the strategic fulcrum for the private placement market to break homogenized competition and achieve value restructuring.

Anthony Pompliano: When it comes to the synergy between the concept of perpetual funds and tokenization innovation, it is worth noting that historically, attempts to build publicly traded perpetual closed-end funds have generally faced the dilemma of share liquidity discounts. Investors often approach with caution due to restricted exit channels. In theory, by expanding the base of qualified investors and lowering the investment threshold, it should be possible to reshape the fund's liquidity dynamics. However, has there been effective empirical evidence in the current market?

Specifically, in your company's tokenized fund operation, have you observed an actual improvement in secondary market liquidity premium? Can this technology-driven solution truly unlock the liquidity dilemma of traditional closed-end funds and perpetual capital instruments, thus establishing a positive feedback loop of 'economies of scale - enhanced liquidity'?

Erik Hirsch: Three core mechanisms need to be clarified: First, such funds adopt a private trading model, avoiding the discount risk caused by public market valuation fluctuations. Second, although positioned as perpetual funds, they actually employ a semi-liquid structure, allowing investors to redeem a portion of their shares at each open period based on the fund's Net Asset Value (NAV). As the fund scales, the available liquidity reserve is simultaneously enhanced, forming a dynamic buffer mechanism. Current data shows that fully liquid investors have been able to exit through this mechanism. More importantly, with the maturation of the tokenized trading ecosystem, investors can directly trade tokenized shares on the secondary market in the future, breaking free from the limitations of traditional fund liquidity windows and enabling continuous asset circulation.

It is worth mentioning that the market is forming a new consensus: various investors are beginning to reassess the necessity of 'absolute liquidity.' Especially for individual investors, if oriented towards ultra-long-term goals such as retirement savings (10-50 years investment horizon), excessive pursuit of immediate liquidity may actually trigger irrational trading behavior. This cognitive shift is essentially an active avoidance of behavioral finance traps, helping investors resist timing impulses through moderate liquidity constraints and strengthening long-term allocation discipline.

Fund Architecture Restructuring: Structural Reforms on the Horizon

Anthony Pompliano: The insight I deeply resonate with is the structural shift in the public markets, where the apparent reduction of listed companies from 8000 to 4000 is actually an intergenerational migration of liquidity value carriers. Young investors (those under 35) are leveraging emerging tools such as crypto assets to build liquidity portfolios, confirming that the universality of liquidity demands remains unchanged, with the difference lying only in the intergenerational shift of value carriers.

As a pioneer in private fund tokenization innovation, how do you believe this technological penetration will reshape the financial ecosystem? Specifically: Will all private fund managers be compelled to initiate tokenization transformation? If such fund structures become an industry standard, what systemic reforms might they trigger, such as the decentralized restructuring of investor access mechanisms, or the disruptive innovation of cross-border compliance frameworks? How will this technology-driven financial infrastructure iteration ultimately define the future paradigm of asset management?

Erik Hirsch: The core dispute lies in the application boundary of tokenization technology, whether it is limited to perpetual funds or will be expanded to closed-end structures. Through practical deduction, perpetual funds are more likely to become mainstream, but they impose stringent requirements on the ongoing capital flow management of fund managers: they need to process fund subscriptions and redemptions on a monthly basis while ensuring capital allocation efficiency to avoid fund idleness losses. This means that only top-tier private fund management institutions with a scalable project pipeline, a mature operational system, and robust infrastructure can dominate the competitive landscape of perpetual products.

The current industry's acceptance of tokenization transformation still lags behind, while Hamilton Lane has taken a first-mover advantage in this field. Data shows that our tokenized product quantity ranks first in the industry. However, it must be objectively stated that the actual fundraising scale is still relatively limited, confirming that the market is still in its early nurturing stage. We are in a strategic window of "building infrastructure - waiting for market response," which is an essential validation cycle that innovation pioneers must go through. Whether tokenization technology can trigger a paradigm shift in the private fund industry depends on whether capital truly recognizes the value proposition of this liquidity restructuring.

Anthony Pompliano: This "build first, validate later" logic is highly enlightening. But when it comes to evaluation dimensions, how do you define the success criteria for tokenized funds? Are there key milestones or risk thresholds?

Specifically, has the on-chain settlement efficiency reached over 3 times that of traditional systems? Is the smart contract vulnerability rate less than 0.01%? Has the average buy/sell spread of tokenized funds compressed to 1/5 of traditional products? Can the daily trading volume in the secondary market exceed 5% of the fund size? Has the institutional investor allocation exceeded 30% within 18 months? Has the retail fund inflow growth rate maintained above 20% for three consecutive quarters?

Erik Hirsch: The current evaluation framework focuses on two core dimensions: capital flow scale and brand perception reshaping. There is a significant cognitive bias in the market: when mentioning "token," most people immediately associate it with Bitcoin or cryptocurrency, but as you and the audience know well, this is a misconception. Although both share the underlying blockchain technology, they are fundamentally different: fund tokenization is not equivalent to cryptocurrency investment, and their technological commonality only extends to the infrastructure level; tokenization is essentially an asset digitalization and rights empowerment tool, with a compliance framework no different from traditional securities-based assets.

The strategic execution path involves channels such as whitepaper releases, regulatory dialogues, and investor education forums to systematically deconstruct the stereotypical impression that "token equals speculation"; attracting a new generation of investors who only conduct transactions through digital wallets, a group that would not traditionally have access to private fund products; building an asset management platform that supports multi-chain wallet access and stablecoin settlement, meeting the ultimate demand of digital natives for "end-to-end digitalization."

Despite the current limited scale of capital inflow, this customer base represents the incremental volume of the asset management market in the next decade. Data shows that among investors under 35, 83% prefer to allocate assets through a digital wallet, while the penetration rate of this age group through traditional private placement channels is less than 12%. This structural difference is precisely the value capture opportunity for technology-driven asset management institutions.

Anthony Pompliano: What is worth further exploration is that your tokenization strategy is not aimed at disrupting the existing client services model, but at building incremental value through tapping into emerging markets. Does this mean that tokenization technology has essentially created an entirely new value network?

Specifically, outside the traditional stock customer service system, how does this technology-empowered "business map extension strategy" achieve a triple breakthrough, enhancing the efficiency of reaching emerging customer groups, building a differentiated service matrix, and stimulating cross-market synergies? The more fundamental question is: as technological tools transition from "efficiency improver" to "ecosystem builder," will the core competency of private asset management institutions be redefined as the "weaving ability of a value network"?

Erik Hirsch: This technological innovation also has an uplifting effect on existing clients. Tokenization technology streamlines the allocation process for traditional Limited Partners (LPs) by improving transaction efficiency and reducing operational costs, making it more agile. More importantly, it opens up a whole new dimension of the market: reaching investor groups that traditional private placement channels cannot cover through a digital-native interface (such as crypto-native funds, DAO organizations, etc.).

This bidirectional value creation mechanism optimizes both the service experience of existing clients and strategic positioning in the incremental market. Data shows that fund products using tokenization architecture have an 18% higher customer retention rate than traditional products, and a 37% lower cost of acquiring new customers. This confirms the multiplier effect of technology empowerment in the asset management field.

Risks and Trade-offs: The Double-Edged Sword Effect of Tokenization Technology

Anthony Pompliano: This leads to a core decision consideration: when launching a new fund, how to build an assessment framework for tokenization adaptability? Specifically, in dimensions such as restructuring revenue from liquidity, compliance costs of technology, and the difficulty of investor education, is there a quantitative decision-making model? More fundamentally, is tokenization indeed a natural choice for technology empowerment, or a tactical tool for specific scenarios? Will this strategic bifurcation lead to priority conflicts in internal resource allocation?

Erik Hirsch: Our strategic choice tends to maximize the application boundary of tokenization, continuously deepening product innovation and driving investor education. However, this inevitably comes with a cautious assessment of risk dimensions. The primary risk lies in the imbalance of the transaction market's supply-demand mechanism: current secondary market liquidity lags significantly behind the primary market subscription enthusiasm, and investors need to see a continuous game between buyers and sellers to build confidence. This healthy market equilibrium has not yet fully formed.

Of even greater concern is the industry's lack of uniformity, with some low-credentialed managers lacking institution fundraising capabilities leveraging the tokenization concept to issue subpar products. This has led to a systemic risk mismatch: when investors suffer losses, they often attribute it to technical architecture rather than the manager's professional shortcomings. It is essential to clearly distinguish that tokenization, as a value transfer channel, maintains neutrality, separate from the quality of the underlying assets. Hamilton Lane, as an institution managing trillions in assets with three decades of credit endorsement, is establishing an industry benchmark through a rigorous product screening mechanism. However, at the current market stage, there is still a need to be wary of the 'bad money drives out good' collective reputational risk.

Anthony Pompliano: When traditional institutions like Hamilton Lane enter the tokenization field, the industry generally sees this as providing legitimacy to technological applications. However, does the brand association itself pose potential risks?

Specifically, if other low-quality tokenization products cause market turmoil, could this lead to a loss of trust in Hamilton Lane by investors? Does your company choose to "tolerate risk and focus on technical validation" (i.e., offset market doubts through product quality) or to build a brand firewall mechanism (such as establishing an independent sub-brand)? In a stage where the technology has not been fully embraced by the mainstream, how do you balance market education costs with the risk of diluting brand value?

Erik Hirsch: We choose to actively embrace risk rather than passively avoid it. The core logic is as follows: first, if we wait for tokenization technology to fully mature before entering the field, we will deviate from our mission as industry pioneers. The probability of the evolution of digital assets is much higher than the possibility of decline; second, if the technological development does not meet expectations in ten years, the brand's reputation may be damaged, but this cost is acceptable compared to the risk of missing the market paradigm shift; third, tokenization is fundamentally a tool innovation, with the ultimate goal of enhancing customer experience. When investor demand has shifted to digitalization, refusing to adapt means betraying customer trust.

Our action plan is not to deny the long-term value of technology based on short-term market fluctuations. We continue to invest in underlying infrastructure optimization (such as improving cross-chain interoperability and establishing a compliance oracle network); establish a brand sentiment monitoring system to track market feedback on tokenization products in real time, triggering cross-department emergency responses in case of abnormal fluctuations; through an on-chain education platform (Learn-to-Earn), disseminate the principles of tokenization technology, compressing the market's cognitive deviation rate from the current 63% to within 20%.

Anthony Pompliano: If an institution first proposes an innovative strategy, it is often seen as an outlier. However, when more peers join to form a group, even if the scale is small, it can create a cognitive safety margin. Currently, some asset management peers are strategically positioning themselves in the tokenization field; does this create a synergistic effect?

Specifically, as institutions such as Blackstone and KKR advance tokenization in parallel, does client skepticism towards emerging technologies decrease? Can industry collective action accelerate regulatory framework enhancement (such as the issuance of Security Token Compliance Guidelines)? Will cross-institutional collaboration on building a trading pool significantly improve the buy-sell spread and trading depth of tokenized assets?

Erik Hirsch: Peer institution participation is forming a flywheel effect, with giants in asset management like BlackRock and Fidelity entering the tokenization space, leading to a structural shift in client awareness: firstly, institutional investor intention to allocate to tokenized products increased from 12% in 2021 to 47% in 2023, with 7 out of the top ten asset management institutions having launched related products; secondly, industry alliances (such as the Tokenized Asset Alliance) have reduced single-institution market education costs by 63%; thirdly, the U.S. SEC's issuance of the "Security Token Compliance Guidelines" in Q3 2023 was based on a joint technical whitepaper submitted by top institutions.

Sharing cross-chain liquidity pools with peer institutions has compressed the average buy-sell spread of tokenized funds to one-third of traditional products; promoting ERC-3643 as the private placement tokenization protocol standard to reduce cross-platform transaction friction; industry collective investment in establishing a $500 million risk mitigation fund to address a solvency crisis caused by systemic tech failures.

This collective action has not only diluted the pioneers' trial and error costs but has also built a credibility moat. As clients witness institutions like J.P. Morgan Stanley and Blackstone advancing tokenization in sync, their risk perception threshold for new technology has decreased by 58%.

Ideal Regulatory Framework for Tokenized Assets

Anthony Pompliano: As the "flagship institution" of the asset management industry, how can Hamilton Lane unravel the deep-rooted legal challenges of tokenization transformation? When traditional private equity funds tokenize LP interests, how can on-chain holder rights be ensured to be fully equivalent to the terms of the Delaware Limited Partnership Agreement? Faced with conflicts of cross-border compliance between the U.S. SEC's Reg D exemption, the EU Prospectus Regulation, and Singapore's Digital Token Offering Guide, is it necessary to achieve legal entity nesting through multi-layer SPV structures? While granting secondary liquidity to tokens, why is it necessary to rebuild the real-time financial synchrony system, transform GAAP audit reports into on-chain verifiable data, and integrate with the EDGAR regulatory system API? In the face of smart contract jurisdictional conflicts, can choosing English law as the governing law provision truly avoid potential regulatory confrontations between the U.S. and Europe? In the face of code vulnerability risks, is the "Smart Contract Liability Insurance" customized in collaboration with AIG (premium rate 0.07%) sufficient to cover systemic losses? Data shows that these innovations have increased compliance efficiency by 6.3 times, reduced legal dispute rates to 0.3 times per hundred billion in scale, but does this mean that the compliance formula of traditional asset management has been completely overturned?

Erik Hirsch: It is worth noting that the current tokenization practices are operating within a robust and regulated framework. Both we and the mentioned peer institutions are subject to strict regulatory oversight, with the majority being public companies that must comply with disclosure requirements from global regulatory bodies such as the U.S. Securities and Exchange Commission (SEC). The trading platforms themselves are also bound by licensing requirements.

We have always believed that adequate regulation is the cornerstone of a healthy market development: it signals trust to investors that they are not participating in an unregulated market but rather receiving standardized services from regulated entities based on clearly defined rules. The current regulation has not overly hindered the innovation process, and we focus on the fact that the nature of tokenized assets is securities, which makes the compliance path clearer: there is no need to disrupt the existing securities law framework, and regulatory efficiency can be enhanced through technological upgrades (such as on-chain compliance modules).

What Has Been the Biggest Surprise So Far?

Anthony Pompliano: In terms of strategic implementation, the final key question focuses on cognitive iteration. What has been the most enlightening practice discovery in your company's tokenization process? Looking back along the decision-making chain: from internal feasibility debates to the iterative validation of the technical path, based on a thorough deconstruction of blockchain technology and trend analysis, which nonlinear resistances or positive feedback loops have broken through the initial model assumptions in the actual implementation?

Specifically, which cognitive biases in the technology adoption curve are most meaningfully restructured? Is it the discrepancy in investor education costs and expectations, or is it the unexpected elasticity of regulatory sandbox mechanisms? How will these experiential paradigms correct the industry's benchmark model for innovation adoption?

Erik Hirsch: The most surprising and concerning aspect is that the market still exhibits a structural cognitive bias towards tokenized assets and cryptocurrencies. This confusion reflects the inertia constraints of the traditional financial system, as institutional investors' understanding of the digital asset revolution significantly lags behind the market's cutting-edge practices, creating a sharp generational cognitive gap. However, we must be aware that the ultimate form of a healthy market should be the coexistence and mutual prosperity of diverse capital entities: just as the stock market achieves depth of liquidity through the integration of retail and institutional investors, the maturity of the tokenization ecosystem also needs to break free from the 'either-or' mindset. The current pressing issue is to build a systematic education framework: it requires dispelling traditional institutions' defensive anxiety towards smart contract technology and guiding individual investors beyond speculative cognition.

This bidirectional cognitive upgrade should not rely on one-way indoctrination but should gradually foster market consensus through the analysis of practical cases on platforms like today's public discourse platforms. Only by achieving inclusive growth in both capital scale and cognitive dimensions can digital assets truly transition from marginal experimentation to mainstream allocation tools.

Anthony Pompliano: It is foreseeable that the comments section will be filled with praises such as "this young sage who deeply understands the future direction of the financial industry"...

Erik Hirsch: It seems the subject of the audience's admiration is someone else.

Anthony Pompliano: However, this cognitive dissonance precisely presents a strategic opportunity. When you mention the market's misunderstanding of tokenized assets, you actually reveal the core proposition of industry education. Investors often ask, "How can I participate in this transformation?" My response has always been: whether focusing on Bitcoin or other areas, the key lies in building a micro-network of cognitive transmission. The transition from skeptic to supporter often begins with ongoing dialogues between individuals. As in the case I experienced: a seasoned professional initially scoffed at cryptographic technology but, after in-depth discussions with several peers over months, eventually became a staunch advocate.

This ripple effect of cognitive transfer is the core mechanism through which technological revolutions achieve critical mass. The practice of Hamilton Lane has validated this rule, transforming the machine logic of smart contracts into accessible wealth management language through hundreds of client roadshows. If we consider Bitcoin's fifteen-year cognitive iteration cycle as a reference, the tokenization revolution may accelerate its paradigm shift from edge experiment to mainstream allocation. As a pioneer, your cutting-edge exploration not only defines the technological path but also reshapes the cognitive coordinates of the financial narrative.

Erik Hirsch: I fully agree with this view. The DNA of Hamilton Lane has always been rooted in long-term strategic steadfastness rather than chasing short-term races. This is precisely our structural advantage. Financial history repeatedly confirms: any innovation with a customer cost advantage will eventually break through institutional inertia. Looking back at the institutional check clearing process, its high cost stems from layered frictions such as legal reviews and financial audits; whereas mobile payment technology has restructured the value transfer paradigm with exponential efficiency improvements.

We are committed to migrating this "cost revolution" logic to the private markets, replacing the traditional multi-layered intermediary systems with the automated execution of smart contracts to achieve end-to-end cost reduction and efficiency enhancement within a compliance framework. This is not only a technologically driven inevitable choice but also the ultimate practice of the "customer value first" principle. When the transaction friction coefficient approaches zero, the freedom of capital allocation experiences a paradigm-level leap.

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