Asset managers are accelerating plans to tokenize exchange-traded funds, driven by investor demand and what one top executive calls a "fear of missing out," according to BNY's global head of ETFs, Ben Slavin.
Firms like BlackRock and Franklin Templeton are exploring ways to put traditional funds on blockchain rails, but fundamental questions about regulation, trading infrastructure, and secondary markets remain unresolved.
"Even though the regulations and the rails aren't fully ready yet, they want to get products out," Slavin said, citing a strong desire to raise assets early.
A growing concern is that tokenized versions of widely held ETFs are already circulating on unregulated platforms without the involvement of the original issuers. This creates a reputation risk for asset managers whose names are attached to products they do not control.
Slavin noted that hundreds of such ETFs trade in opaque, unregulated markets, often beyond the oversight of their sponsors. The dynamic, he said, is pushing firms to prioritize early positioning over waiting for perfect regulatory clarity.