BlackRock is exploring ways to issue exchange‑traded fund shares as blockchain tokens, people familiar with the matter told Bloomberg. The move would extend the firm’s early tokenization work and could allow traditional funds to be issued and traded on‑chain, though any rollout would hinge on regulator approval.
Last year BlackRock launched the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a tokenized cash‑management product backed by short‑term U.S. Treasuries, repurchase agreements and cash. That fund has grown rapidly and now manages about $2.2 billion, illustrating investor demand for tokenized cash instruments.
Turning ETFs into tokens — commonly called tokenized ETFs — would mean fund shares are represented by blockchain tokens that can be transferred and settled on distributed ledgers. Proponents say tokenized ETFs could trade 24/7, settle in minutes instead of the typical T+2 window and open access to investors in markets where conventional ETF infrastructure is limited.
Practical and regulatory hurdles remain. Tokens representing shares would need custodial, tax and compliance frameworks that mirror securities laws. Regulators must clarify whether tokenized ETFs meet existing rules for issuance, disclosure and investor protections — and market participants will need robust custody and reconciliation processes.
If approved, the step would mark a significant institutional embrace of blockchain rails for mainstream products, following broader tests of tokenized bonds, private credit and other asset classes by banks and asset managers. Source: Bloomberg. Read the original coverage for full details.