BlackRock, after launching a $2.2 billion tokenized fund, is exploring the tokenization of its ETF portfolio. This could transform financial markets and make them more accessible to investors.
What Are Tokenized ETFs?
Tokenized ETFs are investment vehicles that allow the purchase of a basket of assets like stocks or bonds through digital tokens recorded on a blockchain. This simplifies the issuance, transfer, and settlement of shares.
Advantages of Tokenization
Tokenizing assets can reduce settlement times from two days to mere minutes. The use of blockchain lowers costs by minimizing intermediaries. Unlike traditional markets, trading on blockchain platforms is available 24/7.
Market Trends in Tokenization
BlackRock is not the only firm exploring tokenization. Other financial institutions like Franklin Templeton and WisdomTree are also launching tokenized funds. According to research firm 21.co, the total value of tokenized assets has already exceeded $3.5 billion.
Tokenization of ETFs could open up new investment opportunities for investors, similar to the way gold ETFs did two decades ago. Making financial markets accessible through the internet and digital wallets creates potential for increased investment.
