Tokenization will eventually reshape fund markets, says JPMorgan

JPMorgan has set out a cautious but clear view on the future of asset management: tokenization is coming, and it could fundamentally alter how funds operate — but don’t expect to see the results overnight.

The US multinational bank believes that converting traditional assets into blockchain-based tokens has the potential to “reshape the funds industry,” extending well beyond exchange-traded funds (ETFs).

Firms are already testing tokenized ETFs as a means of streamlining creation and redemption processes. The bank’s analysis has found that tokenized funds could enable near-instant settlement and open markets to 24/7 trading — a sharp break from today’s fixed market hours.

Ciarán Fitzpatrick, JPMorgan’s global head of ETF product, said in a post on Friday that tokenization is likely to “become part of the ETF ecosystem,” though he cautioned that “we’re a couple of years away from some good use cases.”

“We believe tokenization will certainly drive how the market changes, not just for ETFs but across the funds industry as a whole,” Fitzpatrick added.

The technology is already being tested. JPMorgan is exploring applications through its blockchain unit, Kinexys, as it looks to bring traditional fund infrastructure closer to real-time, digital rails.

Beyond speed, tokenization could also widen access. By digitizing ownership, funds may become easier to distribute and potentially more accessible to a broader range of investors, while improving transparency and operational efficiency.

JPMorgan’s message was, however, measured. While experimentation in this field is accelerating, large-scale adoption depends on clearer regulation, deeper liquidity, and proven investor demand. For now, tokenization sits in a transitional phase, but the direction of travel is increasingly hard to ignore.