On-chain funds support peer-to-peer transfers, but recipients still need verification. The core reason is that these fund shares are legally treated as securities, so transfers cannot bypass compliance checks—whether you receive them from a friend or buy them on the secondary market.
This is different from sending USDC. USDC is a payment tool, and any address can receive it. But tokenized fund shares are "security tokens" governed by securities laws, and regulatory requirements mean they cannot flow freely between all wallets.
Two Transfer Scenarios, Same Recipient Verification Logic
Case A: Peer-to-peer transfer between friends
Franklin Templeton has enabled peer-to-peer transfer for its $380 million tokenized money market fund FOBXX—investors can directly send BENJI tokens to another wallet without going through an intermediary. BlackRock's tokenized money market fund also supports on-chain share transfers.
But enabling transfers does not mean anyone can receive them. Franklin Templeton's product lead has made clear that the feature is designed to "let on-chain assets work seamlessly with the rest of the digital asset ecosystem," but transfers are still subject to compliance constraints.
Case B: Buying on a decentralized exchange (DEX)
Uniswap v4 officially launched Permissioned Pools for regulated tokenized assets in July 2026. This means that even if you trade tokenized fund shares on a DEX, the trade can be blocked by a smart contract—if the receiving wallet is not on the whitelist maintained by the issuer, the swap simply fails.
How the Compliance "Gate" Works
Embedding compliance rules into the token itself is now the industry standard, not a feature of one product.
ERC-3643: Identity before transfer
The tokenized Bitcoin yield fund launched by Coinbase and Apex Group on the Base network uses the ERC-3643 standard. Its logic is: every transfer and holding of the token requires identity verification—before executing a transfer, the smart contract checks the receiving wallet's status in the identity registry to confirm that the address has completed KYC and meets eligibility requirements. Wallets that do not qualify simply cannot receive the tokens.
Transfer agent mechanism: The off-chain registry is the final record
The compliance framework for tokenized funds usually includes a transfer agent, which manages the investor eligibility list and the official ownership registry. The on-chain token is only a "receipt"; the off-chain registry is the final legal record. Even if a recipient receives shares on-chain, if they are not on the transfer agent's whitelist, the registry will not be updated and the shares have no legal effect.
BlackRock's tokenized money market fund states in its prospectus that the transfer agent may restrict transfers under certain circumstances and may freeze, cancel, or reissue tokenized shares.
What Recipients Are Screened For
Recipients need to complete investor eligibility verification, which usually includes:
- Completing the fund's designated KYC/AML process
- Confirming investor type (accredited investor, institution, or retail)
- Confirming whether the jurisdiction supports the product
- Having the wallet address added to the issuer-maintained whitelist
Next Steps
If you want to receive on-chain fund shares, do not ask someone to transfer them to you directly—first complete the fund's compliance verification process and get whitelist approval. Once verified, you can receive shares normally, whether through a friend's transfer or a DEX purchase. If you receive shares without verification, the tokens will be stuck in your wallet and cannot be redeemed or transferred further.
