JPMorgan expects meaningful applications for fund tokenization to remain at least two years away, according to a report by coinmarketcap.com.
Ciarán Fitzpatrick, JPMorgan's global head of ETF product, stated in a recent post that tokenization will reshape the entire funds industry. He noted that the technology is currently in a stage of research and experimentation.
"We believe tokenization will certainly drive how the market changes, not just for ETFs but across the funds industry as a whole," Fitzpatrick said.
He highlighted several potential benefits of tokenizing exchange-traded funds, including near-instant settlement, continuous market access, and faster creation and redemption cycles.
"My view on tokenization is that it will become part of the ETF ecosystem, but we're a couple of years away from some good use cases," Fitzpatrick added.
Institutional interest in digital assets
JPMorgan is already testing applications through Kinexys, the bank's internal blockchain business unit. However, the bank has not yet announced a commercial rollout or specific priority use cases for the unit.
Traditional equities and funds are primary targets for tokenization because current exchange models close on weekends. Tokenization could allow for continuous settlement and after-hours trading.
Other major players are also moving into the space. The New York Stock Exchange, Coinbase, Kraken, and Robinhood are all developing tokenized equity offerings. Additionally, the SEC has approved a rule change allowing Nasdaq to support the trading of tokenized shares.
Market analysts provide varying projections for the growth of tokenized assets. Some estimates suggest the market could reach between $2 trillion and $10 trillion by 2030.
These forecasts depend heavily on the speed of regulatory development and the pace of institutional adoption.
