Bank of America calls tokenization—creating blockchain-based versions of traditional funds—“mutual fund 3.0,” arguing it could be the next major step in investment-product evolution. Analysts led by Craig Siegenthaler say tokenization can make pooled products faster, more transparent and programmable.
On-chain real-world assets are already growing: data from RWA.xyz shows more than $28 billion of assets tokenized, concentrated in private credit and U.S. Treasuries. That base gives firms a runway to test tokenized fund models at scale.
Several market participants are experimenting. Securitize is working with managers including BlackRock, Apollo, KKR and Hamilton Lane to issue tokenized funds, while WisdomTree built an internal tokenization engine and now offers a slate of tokenized products.
But regulatory clarity lags. While the GENIUS Act and the Clarity Act address parts of the stablecoin rulebook, Bank of America notes they leave many questions about tokenized funds unanswered—especially around investor access and whether tokenized vehicles can deliver interest in the U.S.
The report argues tokenized equities face headwinds because commission-free brokerage trading reduced the appeal of tokenized stock products. In contrast, tokenized money market funds—powered by smart contracts—could gain traction: they can offer yields higher than stablecoins (which the GENIUS Act restricts from paying interest) and could upend current cash-sweep revenue models.
Distribution remains the practical bottleneck. Platforms that can onboard retail customers and custody tokens are scarce. Brokerages with crypto divisions—Robinhood, Public and eToro—plus exchanges expanding into custody, like Coinbase, are best positioned to distribute tokenized funds to retail and self-custody investors.
Implications: tokenized money market funds may lead initial adoption, followed by private credit and high-yield strategies. However, regulatory uncertainty, platform risk and limited U.S. access mean adoption will be gradual. Investors and firms should watch compliance developments closely.
Source: CoinDesk. Read the original coverage for full details.