BlackRock exploring tokenization of ETFs following success of BUIDL fund

• BlackRock is reportedly planning to tokenize ETFs that track real-world assets, such as stocks.
• The move could unlock new liquidity for the firm's product suite and advance the integration of DeFi and TradFi.
• BlackRock's move follows a growing trend of asset tokenization among traditional firms.

Asset manager BlackRock is seeking to bring exchange-traded funds (ETFs) that track stocks and other real-world assets (RWA) on-chain, Bloomberg reported on Thursday.

BlackRock eyes tokenized ETF launch

Trillion-dollar asset manager BlackRock is exploring ways to tokenize ETFs that track stocks and other real-world assets, according to a Bloomberg report on Tuesday, citing unnamed sources familiar with the matter. 

Although subject to regulatory approval, the initiative would unlock a new source of liquidity for the products, allow them to trade 24/7 and boost global accessibility. It could also drive the integration of DeFi and TradFi, enabling the formation of new capital markets within the crypto ecosystem.

Following the steps of Franklin Templeton's FOBXX, BlackRock delved into the tokenization trend in 2024 through the launch of its tokenized money market fund, BUIDL, shortly after debuting its spot Bitcoin ETF. Developed in partnership with Securitize, BUIDL has grown to a market capitalization of over $2.2 billion in less than a year and a half, according to CoinGecko data.

BlackRock's CEO, Larry Fink, has previously said that "every asset can be tokenized", adding that tokenization could revolutionize the financial market.

The firm is also looking to build on its success with crypto ETFs as it manages two of the only three crypto ETFs — iShares Bitcoin Trust (IBIT) and iShares Ethereum Trust (ETHA) — to have reached $10 billion in assets under management (AUM).

The move follows strong regulatory momentum surrounding the crypto industry. The Securities & Exchange Commission (SEC) Chair Paul Atkins stated during his announcement of the agency's Project Crypto initiative that he aims to bring the US financial market on-chain.

Likewise, Nasdaq has filed with the SEC to list and trade tokenized stocks and exchange-traded products on its platform. The proposal includes allowing trading of tokenized versions of securities alongside their traditional forms.

Several crypto platforms are also actively rolling out or planning to launch tokenized stocks, including Kraken, Robinhood, Bybit, Coinbase and Gemini.