BlackRock Considers Tokenized ETFs as Wall Street Moves Toward Blockchain Finance

Highlights:

• BlackRock is considering tokenized ETFs as competition from Goldman Sachs and JPMorgan increases across markets.
• Tokenized ETFs may allow trading beyond market hours and create new uses for exchange-traded funds in DeFi.
• Stablecoin growth and new frameworks could boost tokenization and attract more investors to blockchain finance.

BlackRock is considering tokenized ETFs as it looks to extend its presence in digital markets. Bloomberg reported that the firm is discussing plans to convert some of its top-performing funds, including those tied to equities and bonds, into blockchain-based products. The initiative follows the success of its spot Bitcoin ETFs, which have reinforced interest in digital asset strategies.

🧠 BlackRock is exploring tokenized ETFs — a move that could bring 24/7 trading, DeFi composability, and on-chain settlement to traditional finance.

If approved, it may redefine how ETFs are issued, traded, and used as collateral in crypto.

🔗 Discuss more on SoSoValue:… pic.twitter.com/6xE10jLFK9

— SoSoValue (@SoSoValueCrypto) September 12, 2025

The demand for ETFs has grown sharply. Morningstar data shows that ETFs now outnumber publicly listed stocks. Tokenization could add new benefits, including fractional ownership, around-the-clock trading, and the option to use shares as collateral in decentralized finance. These features would push ETFs beyond traditional markets, giving investors more flexibility and access.

FOR THE FIRST TIME EVER

There are now more ETFs in the United States 🇺🇸 than total number of stocks, data compiled by Morningstar shows – Bloomberg

~4,300 – Total number of ETFs
~4,200 – Total number of stocks pic.twitter.com/7FP8DoYnRi

— ETF Tracker (@TheETFTracker) August 25, 2025

BlackRock already holds a dominant role in ETF markets through its iShares range, which manages trillions in assets. The dominance may also be extended with tokenization, as it can provide programmable functionality such as automated dividend payment. Investors would have access to more efficient and transparent fund management with such tools. With the increased accessibility of ETFs, tokenization can also serve to expand traditional markets to digital assets.

BlackRock Considers Tokenized ETFs as Industry Competition Rises

BlackRock already operates one of the largest blockchain-based funds. It’s BlackRock USD Institutional Digital Liquidity Fund, also known as BUIDL, manages more than $2.2 billion. The fund runs on Ethereum, Avalanche, Aptos, and Polygon, showing the company’s commitment to multi-chain platforms.

Other major firms are also pushing into tokenization. Goldman Sachs and Bank of New York Mellon launched a system allowing clients to hold money market funds directly on a private blockchain. JPMorgan described tokenization as a major step for the $7 trillion money market industry. In another example, Galaxy Digital became the first Nasdaq-listed company to tokenize its stock earlier this year.

Analysts argue that tokenized funds provide strong advantages in collateral management. Teresa Ho, a strategist at JPMorgan, said money-market shares can serve as collateral without losing interest during the process. “It speaks to the versatility of money funds,” Ho explained in an interview with Bloomberg. Such efficiency appeals to investors who want both liquidity and returns.

At the same time, stablecoins are reshaping liquidity markets. U.S. banking groups have raised concerns about yield-bearing stablecoins attracting capital away from banks. Even though the GENIUS Act excluded those tokens, analysts expect stablecoin frameworks to strengthen tokenization. With more structured entry points into blockchain finance, tokenized ETFs could benefit from stronger investor confidence and broader adoption.

Outlook for Tokenized ETFs and Market Implications

BlackRock still faces a challenging road. The U.S. Securities and Exchange Commission will likely examine any tokenization proposal with great scrutiny. Even so, BlackRock’s reputation and Washington’s gradual openness toward digital assets may raise the likelihood of eventual approval.

Larry Fink, BlackRock’s chief executive, has consistently supported tokenization. He maintains that every financial asset can be converted into digital form to lower costs and improve efficiency. The proposed tokenized ETFs would act as a key test of that vision and could show how traditional funds adapt to digital infrastructure.