Private Equity Token Settlement for Automated Capital Calls

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Solution Overview

Problem

Capital calls in private equity funds are settled using traditional banking rails and transfer agent ledgers, leading to inefficiencies and manual work among fund managers, administrators, and distributors.

Innovation Solution

The issuance and use of private equity tokens on a digital assets blockchain, enabling automated processing of capital calls and distributions through on-chain cash transactions, eliminating the need for wire transfers and reducing reconciliations.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Ease of manufacture

If traditional banking rails and transfer agent ledgers are used for capital calls, then established infrastructure is utilized, but manual work and reconciliations increase

Engineering Contradiction:

Improveestablished infrastructureVSAvoidmanual work

Core Design Contradiction:

Ease of manufactureVSExtent of automation

Solution Approach 1:

The patent replaces traditional mechanical banking rails and transfer agent ledgers with a digital assets blockchain system. This substitution eliminates manual reconciliations and automated wire transfers by using on-chain cash tokens and smart contracts to settle capital calls directly between investors and fund managers, thereby reducing manual work while maintaining infrastructure functionality.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The blockchain-based system enables self-service capital call processing where the system automatically reconciles transactions, tracks investor commitments, and executes transfers without requiring manual intervention from fund administrators or transfer agents. The on-chain ledger automatically maintains accurate records of capital calls and distributions.

Inventive Principle:

Principle #25Self-service

2Ease of manufacture

If traditional banking rails are used for capital calls, then established payment infrastructure is utilized, but processing efficiency decreases

Engineering Contradiction:

Improveestablished payment infrastructureVSAvoidprocessing efficiency

Core Design Contradiction:

Ease of manufactureVSProductivity

Solution Approach 1:

The patent replaces traditional mechanical banking payment infrastructure with a digital assets blockchain system that processes capital calls through on-chain cash token transfers. This enables faster, more efficient processing by eliminating the need for physical wire transfers, bank clearing houses, and manual reconciliation processes, while still providing secure and reliable payment settlement.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

3Reliability

If traditional transfer agent ledgers are used, then established record-keeping is utilized, but reconciliations and manual work increase

Engineering Contradiction:

Improveestablished record-keepingVSAvoidreconciliations

Core Design Contradiction:

ReliabilityVSExtent of automation

Solution Approach 1:

The patent replaces traditional transfer agent ledgers with a blockchain-based on-chain cash token system. This substitution eliminates the need for manual reconciliations between different ledgers and systems, as the blockchain provides a single source of truth that automatically synchronizes all transactions. The system maintains reliable record-keeping through immutable blockchain records while eliminating the reconciliations required by traditional multi-party ledgers.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Data Source

PatentUS20260065377A1Systems and methods for issuance and use of private equity tokens

Publication Date: 2026.03.05 JPMORGAN CHASE BANK NA

AI summary

A method may include: receiving capital needs from a fund manager; retrieving an amount committed, an amount called, an amount unfunded, and an amount distributed for investors from an investor register on a digital assets blockchain; establishing investor level capital call details; minting a total fund token balance to a blockchain address for the fund manager; enriching the investor level capital call details; sharing, the enriched investor level capital call details with the distributor; moving funds for each investor to on-chain investor accounts; minting blockchain-based cash tokens to blockchain addresses for each of the investors; transferring the blockchain-based cash tokens from the investor blockchain addresses to the blockchain address for the fund manager; transferring the blockchain-based cash tokens from the investor blockchain address to the investor blockchain addresses; and redeeming the blockchain-based cash tokens into cash, wherein the blockchain-based cash tokens are burned as a result of the redemption.