Asset managers are actively exploring blockchain-based ETFs and tokenized funds, motivated in part by the fear of being late to a market that remains mostly unproven. BNY Mellon, which operates custody and settlement infrastructure for traditional finance, told CoinDesk that fund issuers cite competitive pressure—a form of FOMO—as a driver pushing them into tokenized finance products.
The bank's observation tracks with observable behavior in the space. Several large asset managers have filed for spot Bitcoin and Ethereum ETFs in recent years, and some traditional finance firms have begun offering tokenized versions of existing funds. These moves happen despite significant open questions around liquidity, regulatory clarity, and custody standards for on-chain assets.
BNY Mellon's role as a rails provider gives the bank visibility into institutional behavior but also clear self-interest: the bank benefits if tokenized finance becomes a material part of asset management. Still, the underlying logic—that early movers fear being locked out of a potentially large market—aligns with how financial institutions typically behave during platform shifts.
The competitive dynamic matters because it accelerates adoption even before the infrastructure fully matures. Managers entering the space now are learning systems and building relationships with blockchain platforms and custody providers, essentially placing bets on which standards and networks will dominate. Whether tokenized assets become a meaningful portion of fund management depends heavily on whether regulators provide clearer guidance and whether on-chain settlement proves faster or cheaper at scale than traditional clearinghouses.
For now, the market remains small relative to traditional finance. But the fact that large institutions are committing resources suggests they see tokenization as something beyond a passing experiment.