Asset Managers Rush Tokenized ETFs as Unauthorized Clones Spread

Asset managers are building tokenized ETFs. BNY's global head of ETFs, Ben Slavin, said several projects are already underway. BlackRock and Franklin Templeton are among the firms exploring blockchain-based versions of traditional funds.

The early tokenized offerings focused on money market funds. Now asset managers want to extend the model to ETFs. Slavin told TokenPost that firms are worried about missing out. They see tokenization as a way to attract new investors and grow assets before the market gets crowded.

There is a twist. Hundreds of ETF-linked tokens are already trading outside regulated markets, Slavin warned. Third parties create digital representations of publicly traded funds without the issuer's involvement. The original fund managers have no oversight of those products. That creates reputational risk.

This is the tension at the center of the tokenized ETF push. The opportunity is real: 24/7 trading, faster settlement, broader access. The risk is that unauthorized clones dilute the brand and confuse investors before regulated versions even launch.

Slavin said many firms are choosing to move forward despite unresolved questions about infrastructure, secondary market trading, and regulation. The bet is that an early foothold matters more than perfect certainty. That bet works if regulators look the other way on clones. It falls apart if a wave of enforcement actions ties the unauthorized tokens back to the underlying issuers.

What to track: whether fund issuers start filing intellectual property claims against token creators, and whether regulators signal that unauthorized ETF tokens are illegal securities. If both happen, the first-mover advantage grows. If neither does, the clone market expands faster than the legitimate one.

Slavin declined to comment on any specific enforcement actions. He said the number of ETF-linked tokens outside regulated markets is already in the hundreds.