BlackRock, the world's largest asset manager, is reportedly considering the tokenization of exchange-traded funds (ETFs), according to a recent Bloomberg report. This move follows the success of its spot Bitcoin ETFs and reflects a growing interest in applying blockchain technology to traditional financial products.

Tokenization involves representing real-world assets (RWAs) on a blockchain, enabling fractional ownership, increased liquidity, and potentially more efficient trading. ETFs, already a popular investment vehicle, could see significant benefits from tokenization, such as the ability to trade beyond standard market hours and be used as collateral in decentralized finance (DeFi) applications.

BlackRock's interest in tokenization isn't new. The company already manages the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a tokenized money market fund with $2.2 billion in assets across multiple blockchains. This fund allows BNY Mellon clients to access money market funds with share ownership registered directly on Goldman Sachs' private blockchain.

JPMorgan has described tokenization as a "significant leap" for the $7 trillion money market fund industry. However, a recent JPMorgan report in August 2025 presented a more cautious view, noting that RWA tokenization is "underperforming expectations" from traditional finance (TradFi) and is still heavily funded by crypto-native firms. The report also noted that BlackRock's BUIDL fund experienced a $0.6 billion asset loss between May and August 2025.

Other major financial institutions like Fidelity and Goldman Sachs are also actively integrating blockchain technology into their operations, launching tokenized mutual funds and exploring tokenized U.S. Treasury securities. This demonstrates a strategic imperative to leverage tokenization for enhanced capital efficiency and modernized financial products.

The tokenization of RWAs is projected to experience substantial growth in the coming years. Experts predict the RWA market, including stablecoins, could grow from an estimated $185 billion in 2024 to a staggering $30 trillion by 2030. Boston Consulting Group (BCG) and digital exchange ADDX estimate the RWA tokenization market could reach $16.1 trillion by 2030. When stablecoins are included, the total value of tokenized assets reached an estimated $217.26 billion.

RWA tokenization acts as a bridge, converging traditional finance (TradFi) and decentralized finance (DeFi), bringing conventional financial products onto the blockchain and creating innovative hybrid financial instruments. Companies integrating RWA tokenization into their strategies are poised for substantial gains, unlocking new revenue streams, offering novel investment products, and achieving significant operational efficiencies by automating processes and reducing settlement times.

However, challenges remain, including regulatory clarity and the development of harmonized global frameworks. Consistent rules will be crucial for unlocking mainstream adoption and institutional confidence. Infrastructure development, especially "liquidity-first" platforms, institutional-grade custody solutions, and advancements in cross-chain interoperability, are also essential.