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BNY's global head of ETFs says asset managers are racing to tokenize fund products despite unresolved questions around regulation, trading infrastructure, and market structure, driven by a fear of missing an early foothold in blockchain-based finance. Ben Slavin told the outlet that BNY has a number of tokenization projects in flight, and that clients increasingly want to ship products before the underlying plumbing is fully built out. BlackRock, Franklin Templeton, and other major issuers are among those exploring ways to put traditional investment products on blockchain rails, where fund shares can trade as digital tokens.
Why it matters
Slavin framed the dynamic plainly: a lot of clients have a FOMO effect, where they want to get in early, even though the regulations and the rails aren't fully ready yet. That tension, between commercial pressure to launch and an unfinished policy and infrastructure stack, is becoming the defining tension of the tokenization wave. Money market funds have been the test bed, but Slavin said interest now extends well beyond cash-management products into the broader ETF complex.
Market impact
The reputational risk Slavin flagged may matter more than any individual launch. Hundreds of ETFs are already trading as tokenized representations on unregulated platforms worldwide, often without the fund sponsor's involvement, and issuers are starting to worry about products bearing their names circulating beyond their oversight. As tokenized funds move from industry experiment to commercial product, the question is no longer whether the asset managers will show up, but whether the regulatory perimeter will catch up before the lookalike books do.
Frequently asked questions
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What did BNY say about tokenized ETFs?
Ben Slavin, BNY's global head of ETFs, said asset managers are accelerating tokenization plans despite unresolved questions around regulation, trading infrastructure, and market structure, driven by a FOMO effect and a desire to get in early.
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Which asset managers are exploring tokenized funds?
BNY, BlackRock, and Franklin Templeton are among the major issuers exploring ways to put traditional investment products on blockchain rails, with fund shares trading as digital tokens.
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What types of funds are being tokenized first?
Money market funds have been the early test bed, but Slavin said interest now extends well beyond cash-management products into the broader ETF complex, with multiple tokenization variants in development.
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What is the reputational risk BNY flagged?
Slavin warned that hundreds of ETFs are already trading as tokenized representations on unregulated platforms worldwide, often without involvement from the actual fund sponsor, creating brand exposure for issuers with no control over the products.
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Why are asset managers launching before the rules are ready?
Slavin said clients feel there is an opportunity to raise assets in the category and would rather ship products early than wait for regulatory and infrastructure clarity, even though those questions remain open.
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