BlackRock, the world’s largest asset manager, is reportedly planning to tokenize exchange-traded funds (ETFs) on blockchain platforms, buoyed by the success of its spot Bitcoin ETFs, according to Bloomberg sources familiar with the matter.
The firm is eyeing tokenization for ETFs tied to real-world assets (RWAs), though regulatory challenges remain a key obstacle. ETFs have surged in popularity, with Morningstar noting they now outnumber publicly listed stocks.
Tokenized ETFs could enable trading outside traditional market hours and serve as collateral in decentralized finance (DeFi) ecosystems.
BlackRock is no stranger to tokenization, managing the $2.2 billion BlackRock USD Institutional Digital Liquidity Fund (BUIDL), the largest tokenized money market fund, operating on Ethereum, Avalanche, Aptos, Polygon, and other blockchains.
JPMorgan has hailed tokenization as a “significant leap” for the $7 trillion money market fund industry. BlackRock will join an initiative by Goldman Sachs and Bank of New York Mellon, allowing BNY clients to access money market funds with share ownership recorded on Goldman Sachs’ private blockchain.
Goldman Sachs CEO Skeptical of 50 Basis Point Fed Rate Cut
On Wednesday, Goldman Sachs CEO David Solomon expressed doubt that the Federal Reserve will implement a 50 basis point interest rate cut at its upcoming September 17 meeting. Speaking to CNBC, Solomon stated, “Whether or not we have a 50 basis cut, I don’t think that’s probably on the cards,” adding that he is “pretty confident” in a smaller 25 basis point cut instead.
Solomon’s perspective aligns with market expectations, as the CME FedWatch tool indicates a 92.2% probability of a 25 basis point cut, with only 7.8% anticipating a 50 basis point reduction. His comments come shortly after Standard Chartered Bank predicted a larger cut, citing August’s underwhelming jobs report.
Looking ahead, Solomon suggested that one or two additional rate cuts could occur, depending on economic developments.
The Federal Reserve’s decision is noteworthy for financial markets, including cryptocurrencies, as lower interest rates typically increase the appeal of riskier assets like crypto for investors.
Chinese Firms in Hong Kong Face Potential Crypto and Stablecoin Restrictions
Mainland Chinese companies, including state-owned enterprises and financial institutions operating in Hong Kong, may face restrictions on cryptocurrency and stablecoin activities, according to a Thursday report by Caixin. The report indicates that these firms, including Hong Kong branches of Chinese banks, are expected to refrain from pursuing stablecoin licenses in the region.
This development follows earlier reports that major banks, such as HSBC and the Industrial and Commercial Bank of China (ICBC)—the world’s largest bank by total assets—were planning to apply for stablecoin licenses in Hong Kong. The city’s new stablecoin regulatory framework, effective from August 1, includes a six-month transition period, with 77 institutions initially expressing interest in applying.
However, Caixin reports that recent policy changes may lead Chinese banks and other institutions to withdraw their applications for stablecoin licenses. An anonymous senior financial industry source indicated that these entities are likely to delay their applications.
Additionally, a separate Caixin report suggests that the Hong Kong Monetary Authority (HKMA) is considering relaxing capital requirements for banks involved in crypto activities, potentially lowering the capital reserves needed for banks holding cryptocurrencies.
