BlackRock Inc is advancing the integration of blockchain technology within Wall Street by expanding the use of tokenised funds beyond the creation of digital equivalents of traditional assets like stocks, bonds, and money-market funds. The firm envisions tokenised assets playing a larger role in the financial system by serving as collateral, facilitating 24/7 transfers among investors, and reducing the need to redeem shares when changing ownership.
Dan Maley, who oversees BlackRock’s cash business in the Asia Pacific region, confirmed that the company’s tokenised funds are already being used as collateral within the digital-asset market. However, extending this usage into conventional finance has proven more complex. It requires acceptance of these instruments as collateral by banks and financial institutions, integration with existing market infrastructure, and clear regulatory frameworks to provide legal certainty.
Although tokenised shares can be transferred at any time, this does not guarantee investors can redeem their holdings for cash outside standard operating hours. Maley emphasized that the true potential lies in utilising tokenised assets within the broader traditional financial ecosystem, where money-market funds typically serve as collateral for trading activities, including initial and variation margin requirements. Tokenisation could streamline such processes by allowing asset transfers without prior redemption, potentially enabling institutions to keep funds invested for longer periods.
Despite these advantages, several challenges remain. The International Monetary Fund has highlighted issues like platform fragmentation, legal ambiguity, and difficulties linking blockchain-based assets with existing financial systems. Similarly, the International Swaps and Derivatives Association (Isda), the global derivatives industry body, points to operational obstacles including custody arrangements, segregation frameworks, capital and margin treatment, and cross-border legal recognition. Scott O’Malia, Isda’s CEO, stressed that these concerns need to be addressed through industry standards and regulatory clarity.
BlackRock distinguishes that tokenisation does not alter the underlying assets of a money-market fund but rather changes the infrastructure through which ownership rights are transferred. Shares represented as tokens can be moved between approved investors, providing flexibility and potential efficiency gains by bypassing the traditional redemption process.
The initial adopters of tokenised funds have primarily been players within the cryptocurrency sector. Nikhil Sharma, director of BlackRock’s digital-assets team, noted that early users often held stablecoins on-chain and sought ways to generate yield, which later extended to collateral usage.
Since launching its first tokenised money-market fund, BUIDL, in 2024, BlackRock has seen it grow to approximately US$2.3 billion, making it one of the largest funds of its kind. The company is actively working to expand this model within both digital and traditional financial markets.