The New York Fed’s Liberty Street Economics blog has highlighted how tokenized investment funds are beginning to find practical applications, even if adoption remains modest. The post pointed to recent activity in which BlackRock’s tokenized money market fund, BUIDL, has been used as collateral in derivatives and repo-style trades.
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In summary:
In one high-profile case, JPMorgan facilitated a transaction where tokenized BUIDL shares were pledged to Barclays for a derivatives contract. Economists at the Fed noted this shows how blockchain-based instruments are starting to merge with traditional finance infrastructure, though they cautioned that transparency remains limited and operational as well as regulatory risks are significant.
While tokenization is still in its infancy, the involvement of major institutions like BlackRock, JPMorgan and Barclays demonstrates the level of institutional interest in new digital market plumbing. The Fed concluded that although early, these developments underline the potential for tokenization to reshape how collateral and settlement are managed in global markets.
