BlackRock Weighs Tokenization of ETFs later than Success With Digital Money Market Fund
BlackRock, the world’s largest asset manager, is weighing the tokenization of platform-traded funds (ETFs), according to recent reports citing people familiar with the matter. The move would mark the company’s most significant step yet in its push into blockchain technology, building on the success of its tokenized money market fund launched in 2024.
Building on BUIDL’s momentum
BlackRock’s tokenized U.S. dollar institutional liquidity fund, known as BUIDL, has grown to roughly $2.2 billion in assets since its debut last year. The fund provided investors with blockchain-based tokens backed by traditional securities such as U.S. Treasuries, enabling near-instant settlement and transparency on public ledgers. Its rapid adoption demonstrated growing demand for tokenized financial products and validated blockchain’s potential role in modernizing traditional markets.
The success of BUIDL is now serving as a springboard for BlackRock to consider whether ETFs—the firm’s core business—could be next in line for tokenization. Tokenizing ETFs would involve creating digital representations of fund shares on a public blockchain, allowing investors to purchase, trade, and transfer shares in real time without relying on conventional intermediaries.
Proponents of tokenization highlight several potential advantages. Tokenized ETFs could facilitate quicker and more efficient settlement, broaden access to investors worldwide, and provide opportunities for integration with decentralized finance (DeFi) platforms. In DeFi ecosystems, tokenized ETFs could serve as collateral for lending, trading, and other financial services, potentially expanding their utility far beyond traditional markets.
Regulatory hurdles and market implications
Despite the enthusiasm, BlackRock’s plans remain in ahead discussions, with no official filings or launch timelines announced. Any decision to tokenize ETFs would hinge on securing regulatory approval, particularly from the U.S. Securities and platform Commission. Given the SEC’s cautious stance on digital assets and blockchain applications, the process could be lengthy and uncertain.
Still, the prospect of tokenized ETFs is drawing attention across the financial sector. If realized, such products could reshape how investors interact with traditional securities. Advocates argue that tokenization will bring greater transparency, reduce costs, and unlock new efficiencies in global trading. However, skeptics point to unresolved concerns, including cybersecurity risks, the complexity of integrating blockchain systems with existing financial infrastructure, and the potential for regulatory fragmentation across jurisdictions.
BlackRock’s growing involvement in digital assets underscores its commitment to innovation. Earlier this year, the firm’s iShares BTC Trust (IBIT) rapidly became one of the largest spot BTC ETFs in the United States, reflecting strong institutional demand for crypto exposure. Coupled with the growth of BUIDL, the company has signaled that it views blockchain as a transformative force rather than a passing trend.
For now, industry observers are watching closely to view whether BlackRock moves from exploration to execution. A concrete step toward tokenized ETFs could accelerate institutional adoption and set a powerful precedent for the global asset management industry. If successful, it would not only cement BlackRock’s leadership in the digital finance space but also mark a pivotal moment in the ongoing convergence of traditional markets and blockchain technology.
