Franklin Templeton CEO Jenny Johnson, who oversees the $1.6 trillion asset management firm, said she remains a huge fan of blockchain technology and sees exchange-traded funds (ETFs) and mutual funds being on the blockchain during an interview with Bloomberg anchor David Westin.
Johnson, a granddaughter of Franklin Templeton founder Rupert Harris Johnson, joined the company in 1988 and is one of the most powerful women in finance.
In the interview, Johnson said a “significant portion” of Franklin Templeton’s business is stored in mutual funds, around $900 billion of the $1.6 trillion of assets and $78 billion in private credit. Over the years, she has spoken on the topic of innovation in blockchain technology.
“We were astonished by how much less costly it was to run an on blockchain. It’s a very efficient technology … and we think it’s going to open up a lot of new investment opportunities and honestly, eventually, I think ETFs and mutual funds are all going to be on blockchain,” said Johnson.
So How Would a Tokenized ETF Work?
Kent Thune, a research analyst for ETF.com, explains in a recent column that tokenized ETFs, also known as security token ETFs, would combine the structure of an ETF with the benefits of blockchain technology.
“A tokenized ETF would tokenize the underlying assets of the ETF. These tokenized representations would reside on a blockchain, a secure and transparent digital ledger. Investors would hold digital tokens representing ownership in the ETF, instead of traditional ETF shares,” writes Thune.
Wall Street and Tokenization
There has been a strong push among Wall Street firms to ramp up their efforts to tokenize assets on the blockchain, as reported by Benzinga. Tokenization is when tangible as well as intangible assets are converted into digital tokens — everything from shares, and bonds to gold bullion, real estate as well as digital and physical art.
In March 2023, BlackRock CEO Larry Fink commented in his annual letter to shareholders that there is operational potential for some of the underlying technologies in the digital assets space which could have exciting applications. The tokenization of asset classes “offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors,” said Fink.
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