At a recent ETF conference, State Street Global Advisors (SSGA) expressed an interest in tokenizing exchange traded funds (ETFs). That carries weight because State Street manages the single largest ETF, the SPDR S&P 500 ETF Trust, with a market capitalization of almost $400 billion.
“We will be looking at the tokenization of ETFs,” said Matteo Andreetto, head of SPDR EMEA at SSGA, talking at an ETF Stream event. “And then the tokenization of private assets. That for me will be game-changing.”
He added, “From our perspective, clients would love to have SPDR digital asset classes or SPDR (S&P Depositary Receipts) tokenized ETFs.”
Swiss-based Backed Finance has already been experimenting with something similar. It has its bCSPX token on Ethereum, which is backed by the iShares Core S&P UCITS ETF. So far it has not proven enormously popular, but Backed doesn’t have a high profile. The circulating tokens currently amount to $122,000 and one wallet owns 87% of that figure.
In contrast, a higher profile tokenization startup Ondo.Finance has attracted more than $100 million to a tokenized Treasury ETF. And in April, Franklin Templeton surpassed $270 million in assets for its tokenized money market fund. However, the growth of both of these has coincided with U.S. bank collapses, and they make a good place for crypto whales to park their cash.
However, the interest in the tokenization of funds, not just ETFs, has certainly spiked in the last year or so. BlackRock Chair Larry Fink made bullish statements about tokenization in his annual letter in March.
Last year KKR had part of one of its funds tokenized on a public blockchain. Blockchain and tokenization are being embraced by Apollo Global, Hamilton Lane, the UK’s Abrdn, and fund administrator Apex, amongst others.