Credit Fund

Definition ∞ A credit fund is an investment vehicle that pools capital from investors to provide loans or purchase debt instruments. These funds generate returns through interest payments and capital appreciation of the underlying debt. They operate across various debt markets, including corporate debt, real estate debt, and structured credit.
Context ∞ While traditionally distinct from digital assets, credit funds are beginning to explore opportunities within decentralized finance (DeFi), seeking to lend capital against crypto collateral or invest in tokenized debt. The intersection presents challenges related to regulatory compliance, valuation of digital collateral, and the inherent volatility of crypto markets. This convergence signals evolving investment strategies in the digital economy.