BlackRock, the world’s largest asset manager, is reportedly looking for ways to tokenize exchange sales funds (ETFs) on the blockchain following the strong performance of Spot Bitcoin ETFs.
Citing a source familiar with the discussion, Bloomberg reported Thursday that the company is considering tokenizing funds with exposure to real-world assets (RWA). However, such a move requires navigating regulatory hurdles.
ETFs have become one of the most popular investment vehicles. In fact, according to Morningstar, as it is actually above the public stock price now.
Tokenized ETFs may trade beyond standard market time and be used as collateral for decentralized finance (DEFI) applications.
BlackRock’s interest in tokenization is nothing new. It already manages the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), the world’s largest tokenized money market fund, and holds $2.2 billion in assets across Ethereum, Avalanches, Aptos, Polygons and other blockchains.
JPMorgan has been called a “significant leap” in the $7 trillion money market fund industry, pointing to an initiative launched by Goldman Sachs and Bank of New York Mellon, who will be participating in BlackRock at launch.
Under this initiative, BNY clients will have access to money market funds with share ownership registered directly on Goldman Sachs’ private blockchain.
Related: Goldman Sachs, BNY provides tokenized money market funds to clients
Within the blockchain push, TRADFI moves to lock its advantage with money market funds
The rise of tokenized money market funds is not vacuum, but rather a transition to a blockchain-based market, particularly with increasing pressure on traditional finances, with rapid adoption of stability and liquidity.
Cointelegraph reported in May that US bank lobbies are particularly wary of stable coins supporting yields amid concerns that could disrupt traditional banking models. In particular, such tokens were excluded from the US Genius Act, the first comprehensive law regarding Stablecoins.
In June, JP Morgan strategist Theresa Ho said tokenized money market funds are likely to continue to attract capital to the industry while strengthening their appeal as collateral. This will help maintain “cash as an asset” in the face of increasing influence of Stablecoins, she noted.
“Instead of posting cash or financial statements, you can post shares in the money market and not lose interest along the way. That speaks to the versatility of money funds,” Ho told Bloomberg.
Still, analysts say that Stablecoin’s growth under Genius will ultimately benefit to tokenization by providing clearer rules and stronger on-ramps to the blockchain market.
magazine: Robinhood’s tokenized stock has stirred up legal wasp nests
