JPMorgan Says Tokenization Will Transform the Broader Fund Industry, Not Just ETFs

A senior JPMorgan executive overseeing exchange-traded funds said asset tokenization will help drive sweeping change across the broader fund industry.

Kieran Fitzpatrick, JPMorgan's global head of ETF product, wrote on the bank's website on April 24 that "tokenization will clearly drive market changes not only in ETFs, but across the fund industry as a whole."

Improved fund creation and redemption processes, instant settlement and 24-hour market access are among the main advantages of tokenized products, he wrote. Tokenization will ultimately become a core part of the ETF ecosystem, though meaningful use cases are still likely several years away. JPMorgan is studying a range of tokenization applications through Kinexys, its blockchain unit.

Traditional financial firms and regulators have recently stepped up efforts to tokenize conventional investment assets such as stocks and funds, which face trading limits on weekends.

Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission, recently urged companies developing tokenized products to engage actively with the agency. The SEC has also selectively allowed related efforts, including approving a rule change to support Nasdaq's trading of tokenized equities. The New York Stock Exchange, Robinhood, Kraken and Coinbase are also pushing to expand tokenized stock products.

Market experts expect the global market for tokenized assets to grow rapidly to between $2 trillion and $10 trillion by 2030.