BlackRock has been turning familiar funds into tokens, but the portfolios stay the same - what changes are the rails that carry ownership. In practice, tokens that represent fund shares can shift between approved holders without first cashing out.
The firm sees tokenized assets helping as collateral and enabling round-the-clock transfers, though that does not mean investors can redeem for cash at any hour. Some of that is already live: Dan Maley, who oversees BlackRock's cash business in Asia Pacific, said its tokenized funds are being pledged as collateral in the digital-asset market. "The larger unlock becomes then when you can utilize that for the traditional financial ecosystem," Maley said.
BUIDL, BlackRock's inaugural tokenized money-market fund, reached roughly $2.3 billion after launching in 2024, putting it among the biggest products in the category.
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Nikhil Sharma, a director on BlackRock's digital-assets team, said the first wave consisted largely of crypto investors who kept stablecoins on-chain and sought yield. "The extension into collateral was also from that cohort," Sharma said. He added that investors want these products to connect to existing workflows through established custodians and asset servicers, and that adoption "starts to pick up from now."
Moving tokenized assets into traditional collateral and settlement is not just a tech lift. Banks and other institutions need to accept the instruments as collateral, market infrastructure must be able to handle them, and rules have to be clear enough to rely on.
Conventional money-market funds already secure trading positions as collateral, including initial and variation margin. Tokenizing those shares could make it simpler to move exposure without redeeming first, potentially keeping assets invested longer. But the International Monetary Fund points to fragmented platforms, legal uncertainty and challenges linking to existing financial infrastructure. And ISDA chief executive Scott O'Malia put a checklist on the table: "Questions relating to custody and segregation frameworks, capital and margin treatment, cross-border recognition and legal certainty must be addressed with industry standards and regulatory clarity."
In plain English: tokenization swaps the pipes, not the asset. The tech already supports 24-7 transfers between approved investors and is being used as collateral in crypto markets, but wider use in traditional finance hinges on acceptance by institutions, compatibility with current infrastructure and custody setups, and regulatory certainty. That is why tokens can zip around blockchains today yet are not common across standard collateral and settlement systems.
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