BlackRock enters tokenized ETF market, while Nasdaq submits SEC application

BlackRock is exploring the tokenization of ETF shares, a move that is a key component of its strategy to break through the boundaries of traditional markets and expand digital asset infrastructure. According to a September 11 report by Bloomberg News, people familiar with the matter revealed that the company is considering creating a blockchain-based ETF version linked to RWAs such as stocks, though the relevant plans are currently confidential. This move builds on BlackRock's launch of the $2.2 billion BUIDL tokenized money market fund in March 2024, just two months after the debut of its Bitcoin ETF. BlackRock CEO Larry Fink previously stated that all financial assets can be tokenized, and reiterated this view in his 2025 annual letter to investors. Tokenized ETF shares will achieve three key benefits: first, they will overcome the limitations of standard Wall Street trading hours; second, they will increase accessibility to U.S. products for global investors; and third, they will create new collateral opportunities within cryptocurrency networks. Notably, the same week this report was published, Nasdaq also submitted an application to the SEC to allow trading of tokenized stocks and ETFs on its platform. BlackRock has tested tokenized fund shares using JPMorgan Chase's Kinexys infrastructure and positions itself as an "early adopter of digital settlement models." The money market funds launched by Franklin Templeton and BlackRock have paved the way for large-scale tokenization practices. As of September 11, tokenized money market funds were the largest RWA category, excluding private credit, with a market capitalization of $7.4 billion.

At the same time, ETFs offer broader asset exposure and trading mechanisms more adaptable to blockchain deployments. Currently, exchanges such as Kraken, Robinhood, and Coinbase have launched tokenized stocks in international markets or plan to advance related businesses.

However, the report points out that a key challenge remains: how to coordinate "Wall Street Clearing's ETF settlement process" with "24/7 instant trading capabilities." These challenges pose both technical and regulatory challenges for custodians managing the transition between traditional and digital infrastructure. BlackRock's exploration reflects that mainstream financial institutions are evaluating blockchain technology to improve market infrastructure, including optimizing collateral flow efficiency and settlement speed. The company's advocacy of digital assets, coupled with changes in the regulatory environment, has made "tokenized ETFs" another important bridge connecting traditional finance and DeFi systems.