Tokenization holds a lot of promise but its realization is likely still some ways away, according to JPMorgan Chase’s. (NYSE:JPM) global ETF product chief.
Tokenization will reshape financial markets, “but we’re a couple of years away from some good use cases,” Ciarán Fitzpatrick said in a post on April 24.
Fitzpatrick pointed to JPMorgan’s efforts to tokenize ETFs through its Kinexys blockchain platform, saying the bank is still in proof-of-concept.
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Fitzpatrick’s remarks came after JPMorgan CEO Jamie Dimon said in his annual letter last month that the bank’s continued success hinges on how it can adopt blockchain and AI, adding that it needed to move quickly.
One potential benefit of tokenization is cutting costs both for institutions and users by eliminating operational friction and intermediaries, Fitzpatrick said in his post.
Tokenization has become all the rage on Wall Street over the past year, under a warming regulatory environment under the Trump administration.
The Securities and Exchange Commission in January issued a statement clarifying its position on tokenized securities, saying traditional rules of registration and disclosure still apply. SEC Commissioner Hester Peirce in March encouraged companies considering tokenization to speak with the regulator.
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“We want to work with you toward being able to experiment to see whether the market wants your products,” Peirce said.
Peirce’s remarks came shortly after the SEC approved a rule change allowing the trading of tokenized shares on Nasdaq.
Against this backdrop, institutions such as BlackRock (NYSE:BLK) and Fidelity continue to dip their toes into the space with tokenized money market funds.
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