JPMorgan says tokenization could change how the funds industry operates, including the exchange-traded fund market.
Summary
- JPMorgan said tokenization could reshape ETFs and the wider funds industry over the coming years.
- Ciarán Fitzpatrick said strong ETF tokenization use cases may still be a few years away.
- Tokenized ETFs could support faster settlement, improved redemption, and wider access beyond normal market hours.
Ciarán Fitzpatrick, JPMorgan’s global head of ETF product, said tokenization may affect ETFs and wider fund products over time.
“We believe tokenization will certainly drive how the market changes, not just for ETFs but across the funds industry as a whole,” Fitzpatrick said in a post published Friday.
ETF tokenization could improve settlement
Fitzpatrick said firms continue to test tokenized ETFs because the model could improve creation and redemption. It could also support “near-instant settlement” and round-the-clock access for some products.
He said tokenization may become part of the ETF market, but practical use cases still need more time.
“My view on tokenization is that it will become part of the ETF ecosystem, but we’re a couple of years away from some good use cases,” he said.
In addition, JPMorgan is already studying tokenization through Kinexys, its blockchain business unit. The bank has used the unit to explore how blockchain can support financial markets and settlement systems.
The comments show that large financial firms still see value in tokenized assets, even as they take a cautious view on timing. JPMorgan’s position suggests that tokenization may grow through tested use cases rather than fast market adoption.
Regulators and exchanges show growing interest
Traditional finance firms and regulators have shown more interest in tokenized assets. The focus has included equities, funds, and other products that trade only during market hours.
SEC Commissioner Hester Peirce recently urged firms working on tokenized products to speak directly with the agency. The SEC has also allowed some tokenization-related efforts, including a Nasdaq rule change for tokenized share trading.
Major firms, including the New York Stock Exchange, Robinhood, Kraken, and Coinbase, are also working on tokenized equity products. Analysts expect tokenized assets to reach trillions of dollars by 2030, though estimates vary widely.
