Franklin

Ondo

Sandy

<a rel="noopener noreferrer nofollow">Franklin Templeton</a>, one of the largest asset managers in the world, is deepening its push into crypto-native finance.&nbsp;
The firm announced a partnership with <a rel="noopener noreferrer nofollow">Ondo</a> Finance, a leading tokenization provider, to tokenize a set of its exchange-traded funds (ETFs).
For Sandy Kaul, head of innovation at Franklin Templeton, the move is early proof of a much bigger shift coming to <a rel="noopener noreferrer nofollow">traditional</a> markets.
<a href="https://www.thestreet.com/crypto/markets/goldman-sachs-files-with-sec-to-launch-bitcoin-fund" rel="noopener noreferrer nofollow">Related: Goldman Sachs files with SEC to launch Bitcoin fund</a>
<h2 id="tokenization-unlocks-financial-strategies-for-retail-investors">Tokenization unlocks financial strategies for retail investors</h2>
By moving traditional assets onto a blockchain, Franklin Templeton and Ondo Finance are creating a new way for retail investors to interact with their holdings.&nbsp;
Sandy Kaul believes this partnership is about more than just changing a digital format; it is about reinventing what an investment can do.
<blockquote>
 "I am super excited about what Ondo is doing in terms of inventing a new category of financial exposure," Kaul told TheStreet <a rel="noopener noreferrer nofollow">Roundtable</a>. "These are instruments that allow you to have exposure to the economics of the underlying investments, but in a token that can act as a permissionless token, which gives you far more utility."
</blockquote>
Tokenized <a rel="noopener noreferrer nofollow">ETFs</a>&nbsp;are often "static" assets that investors simply buy and hold. However, tokenized versions offer a more dynamic experience where the investment itself can be used in other digital financial applications.
<blockquote>
 "Rather than just getting the return stream, you're also able now to use that return stream as its own asset," Kaul said. "I could put that return stream into a <a rel="noopener noreferrer nofollow">lending</a> protocol. I could put that return stream up as collateral. This is really starting to add a whole new layer of utility to my ETF holding that isn't possible in today's ETF holdings."
</blockquote>
<h2 id="are-etfs-dying">Are ETFs dying?</h2>
Over the past 15 years, roughly since the <a rel="noopener noreferrer nofollow">2008 global financial crisis</a>, trillions of dollars have moved out of mutual funds and into ETFs.
Kaul believes the same kind of migration is about to play out again.
<blockquote>
 "Tokenization is going to do to ETFs what ETFs did to <a rel="noopener noreferrer nofollow">mutual funds</a>," Kaul said.&nbsp;
</blockquote>
<h3 id="popular-on-thestreet-roundtable">Popular on TheStreet Roundtable:</h3>
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 <li><a href="https://www.thestreet.com/crypto/innovation/every-stablecoin-dollar-on-solana-turns-over-6x-faster-than-on-ethereum" rel="noopener noreferrer nofollow">Every stablecoin dollar on Solana turns over 6x faster than on Ethereum</a></li>
 <li><a href="https://www.thestreet.com/crypto/markets/white-house-advisor-to-discuss-key-legislation-today" rel="noopener noreferrer nofollow">White House advisor to discuss key legislation today</a></li>
 <li><a href="https://www.thestreet.com/crypto/markets/quantum-threat-looms-far-beyond-bitcoin-says-grayscale" rel="noopener noreferrer nofollow">Quantum threat looms far beyond Bitcoin, says Grayscale</a></li>
</ul>
In other words: a structural, generational migration of capital.
<blockquote>
 "In two to three years, every security that sits inside of an ETF is likely to be tokenized," she said.
</blockquote>
The vision goes beyond simple wrappers. Tokenized ETFs could let investors hold the token wrapper, or "burn" it to take direct possession of the underlying <a rel="noopener noreferrer nofollow">tokenized</a> securities, mixing and matching holdings based on their own strategy.
It's a shift from investors adapting to standardized products, to products adapting to individual investors.
If Kaul is right, the ETF industry's biggest disruptor may not be another ETF. It may be a token.
<a href="https://www.thestreet.com/crypto/markets/ondo-exec-explains-how-perpetual-futures-stay-in-line-with-spot-prices" rel="noopener noreferrer nofollow">Related: Ondo exec explains how perpetual futures stay in line with spot prices</a>

"Tokenization is going to do to ETFs what ETFs did to mutual funds," says Franklin Templeton's Sandy Kaul

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