‘Game-Changer’ – BlackRock Weighs ETF Tokenization As JPMorgan Flags Industry Shift

Authored by Sam Bourgi via CoinTelegraph.com,

BlackRock is reportedly exploring tokenized ETFs after Bitcoin fund success, as Wall Street giants tout tokenization as a game-changer for finance…

BlackRock, the world’s largest asset manager, is reportedly exploring ways to tokenize exchange-traded funds (ETFs) on the blockchain, following the strong performance of its spot Bitcoin ETFs.

Citing sources familiar with the discussions, Bloomberg reported Thursday that the company is considering tokenizing funds with exposure to real-world assets (RWA). Any such move, however, would need to navigate regulatory hurdles.

ETFs have become one of the most popular investment vehicles — so widespread, in fact, that they now outnumber publicly listed stocks, according to Morningstar.

Tokenizing ETFs could potentially allow them to trade beyond standard market hours and be used as collateral in decentralized finance (DeFi) applications.

Source: The Kobeissi Letter

BlackRock’s interest in tokenization is not new. It already manages the world’s largest tokenized money market fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), which holds $2.2 billion in assets across Ethereum, Avalanche, Aptos, Polygon and other blockchains.

JPMorgan has called tokenization a “significant leap” for the $7 trillion money market fund industry, pointing to the initiative launched by Goldman Sachs and Bank of New York Mellon, which BlackRock will join at launch.

Under the initiative, BNY clients will gain access to money market funds with share ownership registered directly on Goldman Sachs’ private blockchain.

BUIDL market cap by network. Source: RWA.xyz

Amid blockchain push, TradFi moves to lock in dominance with money market funds

The rise of tokenized money market funds isn’t happening in a vacuum but alongside mounting pressures on traditional finance — particularly from the rapid adoption of stablecoins and the shift of liquidity into blockchain-based markets.

Cointelegraph reported in May that the US banking lobby was especially wary of yield-bearing stablecoins amid concerns that they could disrupt traditional banking models. Notably, such tokens were excluded from the US GENIUS Act, the first comprehensive legislation on stablecoins.

Source: ayyyeandy

In June, JPMorgan strategist Teresa Ho said tokenized money market funds will likely keep attracting capital to the industry while enhancing their appeal as collateral. This, she noted, could help preserve “cash as an asset” in the face of stablecoins’ growing influence.

“Instead of posting cash, or posting Treasurys, you can post money-market shares and not lose interest along the way. It speaks to the versatility of money funds,” Ho told Bloomberg. 

Still, analysts say stablecoin growth under GENIUS will ultimately benefit tokenization by providing clearer rules and stronger on-ramps into blockchain markets.