The Bank of New York Mellon Corporation (BNY Mellon) warned that Wall Street asset managers are adopting tokenization driven by a fear of missing out (FOMO). Ben Slavin, BNY's global head of exchange-traded funds (ETFs), told CoinDesk in an interview that institutions want to get in early on tokenization despite unresolved regulatory questions. The trend follows growing interest in tokenized money market funds on Wall Street, where digital tokens represent ownership of real-world assets such as financial instruments and property.
BNY Mellon Launches Multiple Tokenization Projects
BNY Mellon has numerous projects in flight to tokenize ETFs, according to Slavin. The 242-year-old bank traces its lineage to the Bank of New York, founded in 1784, making it one of the three oldest banks in the United States.
Tokenization uses blockchain technology to create digital tokens representing real-world assets. BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) holds $2.35 billion in total asset value, as per rwa.xyz. The tokenized money market fund invests in cash, U.S. Treasury bills, and repurchase agreements.
Franklin Templeton's OnChain U.S. Government Money Fund (BENJI) holds $831.78 million in total asset value, according to rwa.xyz. The fund invests at least 99.5% of its total assets in U.S. government securities, cash, and repurchase agreements.
Ben Slavin Attributes Tokenization Adoption to FOMO
Wall Street is currently tokenizing money market funds but its interest lies far beyond, Slavin told CoinDesk. Institutions think there is an opportunity to raise assets via tokenization.
"A lot of them really have a 'FOMO' effect, where they want to get in early," Slavin stated.
Asset managers continue to tokenize funds even though questions around regulatory frameworks regarding the products remain unresolved, Slavin argued. Tokenization allows funds to be traded 24/7, which potentially reduces settlement periods and expands access to investors globally.
BNY Executive Warns of Reputation Risks in Unregulated Markets
Slavin raised concerns about tokenized versions of popular funds circulating in unregulated secondary markets without the approval of the issuers themselves.
"It's opaque," the BNY executive warned. "It effectively creates a reputation risk, even though it's not at all affiliated, frankly, with the asset manager."
Asset managers think winning the tokenization race matters more than waiting for perfect clarity, Slavin concluded.
FAQ
What did BNY Mellon warn about Wall Street tokenization?
BNY Mellon warned that Wall Street asset managers are adopting tokenization driven by a fear of missing out (FOMO). Ben Slavin, BNY's global head of ETFs, told CoinDesk that institutions want to get in early despite unresolved regulatory questions.
How much do BlackRock and Franklin Templeton's tokenized funds hold?
BlackRock's BUIDL holds $2.35 billion in total asset value, according to rwa.xyz. Franklin Templeton's BENJI holds $831.78 million in total asset value, per the same source.
What reputation risks did Ben Slavin identify?
Slavin warned that tokenized versions of popular funds circulating in unregulated secondary markets without issuer approval create reputation risks for asset managers, even though such products are not affiliated with the original issuers.
