BlackRock, the world’s largest asset manager, is exploring ways to bring one of Wall Street’s most popular financial products into the digital era. The company is studying how to make exchange-traded funds (ETFs) available as tokens on the blockchain, according to people familiar with the plans. While details remain private, the move could reshape how investors access and use ETFs in global markets.
From Bitcoin ETF to Tokenized Funds
In 2024, BlackRock launched BUIDL, a tokenized money-market fund. The product quickly grew to more than $2 billion in assets and found strong adoption on crypto platforms. This success followed the debut of BlackRock’s spot Bitcoin ETF, which became one of the fastest-growing exchange-traded funds in history.
These milestones positioned BlackRock as a pioneer in bridging traditional finance and digital assets. Now the firm wants to take the next step by exploring tokenized versions of ETFs tied to real-world assets like stocks.
What Tokenization Means for ETFs
Tokenization is the process of creating digital versions of traditional assets so they can trade on blockchain systems. For ETFs, this could open a range of possibilities:
- Extended trading hours: Investors could trade tokenized ETFs outside Wall Street’s regular schedule.
- Global accessibility: Tokenized products would make US-based funds easier for international investors to access.
- New collateral uses: Tokenized ETFs could be used across crypto networks for lending, borrowing, or settlement.
Advocates believe this transition could transform financial markets. Tokenized assets can settle instantly, support fractional ownership, and reduce reliance on legacy clearinghouses.
Industry Momentum Builds
BlackRock is not alone in exploring tokenization. Franklin Templeton has also experimented with tokenized funds, while exchanges such as Kraken and Robinhood are offering tokenized stocks overseas. Startups are piloting similar services in controlled environments.
The ETF market, worth trillions of dollars, could become a proving ground for blockchain adoption. ETFs are already flexible investment vehicles, making them a natural candidate for tokenization.
BlackRock’s Push Toward Digital Assets
BlackRock has consistently signaled its belief in digital transformation. The firm has tested tokenized shares in trades using JPMorgan’s Onyx, now called Kinexys. It has also taken part in early experiments with blockchain-based settlement systems.
CEO Larry Fink has been outspoken about the potential of this technology. In his 2025 annual letter to investors, he wrote that every financial asset could eventually be tokenized. He sees tokenization as a path toward faster settlement, more efficient collateral use, and broader access for investors.
The Challenges Ahead
Despite the enthusiasm, significant hurdles remain. Traditional ETFs settle through Wall Street clearinghouses, which operate on limited schedules. Tokenized assets, by contrast, move instantly and trade around the clock. Reconciling these two systems poses technical and regulatory challenges.
Regulators will need to decide how tokenized ETFs fit into existing rules. Custodians and clearinghouses will also need to adapt to ensure investor protection. Still, the regulatory climate has shifted in recent years. Policymakers in Washington have shown more openness to letting firms test blockchain markets within controlled environments.
A Small Market With Big Potential
The current market for tokenized assets is still small, estimated at around $28 billion by tracker rwa.xyz. That figure pales in comparison to the multi-trillion-dollar US ETF industry. Yet BlackRock’s exploration shows how seriously mainstream finance is taking the potential of blockchain.
If tokenized ETFs gain approval, they could set the stage for larger parts of the financial system to move on-chain. Nasdaq has already asked regulators for permission to allow tokenized stock trading on its exchange. If granted, it would mark a historic step in integrating blockchain into core US equity markets.
The Future of ETFs on the Blockchain
BlackRock’s consideration of tokenized ETFs is more than an experiment. It represents a potential turning point in the evolution of financial markets. Tokenization could make ETFs more accessible, efficient, and versatile than ever before.
While many technical and regulatory questions remain, the trend is clear. Traditional finance is moving closer to blockchain, and BlackRock is leading the way.
This article highlights the exciting potential of tokenized ETFs and blockchain in revolutionizing finance, but it also rightly points out the significant challenges ahead regarding regulation and technical integration. Its a fascinating glimpse into the future of investing.
The article highlights the exciting potential of tokenized ETFs, but Im skeptical about the challenges, especially regulatory hurdles and how theyll reconcile with traditional systems. It feels like a necessary step for the future, though.