BlackRock Tokenization Push Gathers Pace as Wall Street Races to Tokenize Assets

BlackRock's BUIDL tokenized money-market fund has grown to roughly US$2.3 billion since its 2024 launch, giving the asset manager an established product as it explores extending tokenized fund shares beyond crypto markets. According to Dan Maley, who oversees the firm's cash business in Asia Pacific, BlackRock's tokenized funds are already used as collateral in digital-asset markets. The proposed next step is to connect that use to Wall Street's broader financing and margin systems, where conventional money-market funds already support trading positions, including initial and variation margin.

The core appeal lies in the transfer mechanics. Tokenized shares could pass between approved investors without a cash redemption first, potentially allowing institutions to keep capital invested while transferring ownership or pledging a position. However, the article stresses that round-the-clock transfers do not imply round-the-clock cash redemptions. Ownership may move on-chain while the fund's redemption process remains governed by its own terms and operating arrangements, a gap the article describes as material.

Several preconditions must be met before traditional-finance use becomes practical. Banks and other institutions would need to accept the instruments as collateral, existing market infrastructure would need to accommodate them, and regulation would need to provide sufficient legal certainty. The International Monetary Fund has identified fragmented platforms, legal uncertainty, and difficulties connecting tokenized finance to existing infrastructure as sector problems. The International Swaps and Derivatives Association, whose chief executive is Scott O'Malia, has pointed to custody and segregation frameworks, capital and margin treatment, cross-border recognition, and legal certainty as areas requiring industry standards and regulatory clarity.

BUIDL's current customer base largely reflects on-chain demand. Nikhil Sharma, a director on BlackRock's digital-assets team, said early users came mainly from crypto markets, including stablecoin holders seeking yield. Expansion into conventional markets would require a different network of counterparties and operating arrangements. The near-term focus, according to the article, is the acceptance layer: bank recognition, infrastructure compatibility, and rules governing custody, margin, and cross-border treatment. Until those are in place, tokenized fund shares remain a live collateral tool in digital-asset markets and a proposed extension into traditional finance.