BlackRock is exploring a new idea that could change how people invest in exchange-traded funds. The company is looking at placing ETFs on public blockchains. An ETF, or exchange-traded fund, is a group of stocks or other assets that trade on an exchange like a single stock. Many investors use ETFs because they provide an easy way to gain exposure to different markets. If these funds are tokenized, they could move from traditional stock markets to blockchains where they would exist as digital tokens. This change could allow trading to happen around the clock and reduce the time it takes for transactions to settle. It could also open up access for people in countries where ETFs are hard to buy.
BlackRock already tested tokenization through the BlackRock USD Institutional Digital Liquidity Fund, known as BUIDL. That fund is backed by U.S. Treasuries, repurchase agreements, and cash. It quickly became the largest tokenized Treasury product in the world, managing about $2.2 billion. By using blockchain rails, BlackRock showed that tokenization can work in practice and can scale to a large size. This gives the company a reason to expand from Treasuries into ETFs tied to real-world assets such as stocks. A tokenized ETF would take the same fund structure used today but issue shares as tokens instead of keeping them on a traditional exchange ledger.
The benefits of tokenization are clear. Trading ETFs on chain would not stop when markets close. Investors could trade 24/7, much like they can with Bitcoin or Ethereum. Settlement, which often takes two business days in traditional finance, could happen within minutes. This faster settlement reduces risk for investors and makes it easier to move money in and out of funds. Global investors could gain access even if their local markets do not offer ETFs. This type of access matters in places where financial products are limited. Tokenized funds could act as a bridge, letting more people hold assets like U.S. stocks through blockchain tokens.
The idea of tokenized ETFs is not only about convenience. It is also about efficiency. Blockchains remove the need for many middlemen. Instead of relying on banks, brokers, and clearinghouses, a blockchain can handle transactions with transparency. Asset managers, fintech firms, and banks are already testing blockchain for bonds, private credit, and other financial products. ETFs may be the next step. If regulators approve, tokenized ETFs could become a mainstream option alongside traditional funds.
The challenge is regulation. Governments must decide how tokenized ETFs fit within existing laws. In the United States, the Securities and Exchange Commission has taken time to approve new crypto products. While Bitcoin ETFs gained approval, tokenized versions of equity funds may face longer reviews. BlackRock cannot roll out these products until it receives a green light from regulators. Still, the exploration shows where finance may be heading. Tokenized funds could become part of a broader movement where real-world assets move onto public blockchains.
At the same time, the wider crypto market is showing strength. Coinbase analysts believe the current bull market could last into the fourth quarter. They point out that while Bitcoin often struggles in September, the trend broke in 2023 and 2024 and no longer carries strong statistical weight. Digital asset treasuries now hold over $130 billion in Bitcoin, Ethereum, and Solana. This shows growing demand for large-cap tokens, even as smaller crypto projects may face consolidation. The move into tokenized ETFs connects to this trend. As investors grow more comfortable with digital assets, they may look for traditional investment products like ETFs in tokenized form.
A tokenized ETF could combine the best of both worlds. It would have the familiar structure of a fund tied to stocks or bonds, with the speed and access of blockchain. Investors could hold shares in a wallet the same way they hold crypto. Transfers could be instant. Liquidity could improve since tokens can move across borders without the limits of national exchanges. For many, this would make investing simpler and more direct. Instead of waiting for market hours, they could trade whenever they choose. Instead of waiting days for settlement, they would see results within minutes.
BlackRock’s interest signals confidence that tokenization has real value. The $2.2 billion BUIDL fund proved the model works with Treasuries. Extending this to ETFs could reshape how global investors trade funds. If regulators agree, ETFs tied to stocks may soon live on blockchains, bringing 24/7 trading, faster settlement, and broader access. This would fit the direction finance is already taking as institutions test blockchain rails for many asset classes. Investors are watching closely to see if BlackRock can lead the way again. The combination of traditional ETFs and blockchain tokenization could mark a turning point in how markets operate in the years ahead.
