BNY sees 'FOMO' driving asset managers into tokenized funds

Markets BNY sees 'FOMO' driving asset managers into tokenized funds Fund issuers are exploring blockchain-based ETFs amid fears of missing an early foothold in tokenized finance. By Helene Braun | Edited by Cheyenne Ligon Jun 23, 2026, 4:34 p.m. 2 min read Make preferred on Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Make preferred on Summary Show Asset managers are accelerating plans to tokenize ETFs, driven by investor demand and concerns about missing an early opportunity in blockchain-based finance. BNY says firms are moving ahead with tokenized fund products despite unresolved questions around regulation, trading infrastructure and market structure. Issuers face growing reputational risks as third parties create tokenized versions of existing ETFs that can trade outside traditional financial markets without their involvement. As tokenization moves from industry experiment to commercial product, asset managers are rushing to establish a foothold in the market. "We have a number of different projects in flight, different variants to effectively tokenize ETFs," Ben Slavin, global head of exchange-traded funds (ETFs) at BNY, said in an interview. The trend comes as major firms, including BlackRock, Franklin Templeton and others, explore ways to place traditional financial products on blockchain rails, a process that allows fund shares to trade as digital tokens. While many tokenized products launched so far have focused on money market funds, Slavin said the interest extends well beyond cash-management products. "What is interesting about it is I think a lot of clients feel like there is an opportunity there to raise assets," he said. "A lot of them really have a 'FOMO' effect, where they want to get in early." The push comes even though many of the market's underlying questions remain unresolved as asset managers continue to grapple with how tokenized funds should interact with existing fund infrastructure, how secondary trading should work and which regulatory frameworks will ultimately govern the products. But Slavin said firms appear reluctant to wait. "Even though the regulations and the rails aren't fully ready yet, they want to get products out," he said. Wall Street believes that blockchain networks could eventually become a new distribution channel for traditional investment products. Tokenized funds could allow investors to hold and transfer fund shares around the clock, potentially reducing settlement times and expanding access to global investors. One concern emerging for fund issuers, according to Slavin, is that tokenized versions of well-known ETFs are already trading on platforms outside traditional financial markets, often without direct involvement from the fund sponsors themselves. "There are ETFs, like hundreds of them, that are trading in unregulated markets around the world," he said. Because anyone can theoretically create a tokenized representation of a publicly traded fund, issuers face the prospect of products bearing their names circulating beyond their oversight. "It's opaque," he said. "It effectively creates a reputation risk, even though it's not at all affiliated, frankly, with the asset manager." That dynamic has become a growing topic of discussion among BNY's asset-management clients as they evaluate their own tokenization strategies. Similar to the early days of bitcoin and crypto trading, the technology is evolving faster than the rules governing it. Nevertheless, Slavin said asset managers increasingly view tokenization as an area where being early may matter more than waiting for perfect clarity. 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