BlackRock plans to push iShares ETFs onto the blockchain, potentially leading the market out of the bear market?

BlackRock, the world’s largest asset management firm, has recently been in active discussions with the U.S. Securities and Exchange Commission (SEC) regarding the potential transfer of its flagship product, the iShares ETF series, onto blockchain networks to achieve asset tokenization. If approved, investors will be able to hold digitalized ETF tokens, enabling 24/7 trading and potentially revolutionizing existing settlement and collateralization models. Bitwise Chief Investment Officer Matt Hougan stated that such products could be key narratives leading the market out of a bear phase and fostering deep integration between traditional finance (TradFi) and DeFi.

BlackRock’s $5 Trillion Tokenization Opportunity with iShares

BlackRock’s motivation to push iShares ETFs onto the blockchain centers on capturing the vast potential market in digital assets. By tokenizing traditional ETFs (such as stock and bond portfolios), BlackRock can allow these “digital natives” to invest directly in high-quality traditional financial assets without leaving the blockchain ecosystem. This strategy builds on the success of its previously launched tokenized fund, BUIDL, which currently manages approximately $2.1 billion in assets and demonstrates strong institutional demand for on-chain yield products.

According to BlackRock’s official website, its iShares division manages assets exceeding $5 trillion.

Regulatory Dialogue with the SEC: Compliance Framework and Technical Challenges

Despite the ambitious vision, bringing mainstream ETFs onto the blockchain faces complex regulatory hurdles, which are the current focus of discussions with the SEC. Key concerns include blockchain network stability, cybersecurity risks, and how to seamlessly embed traditional securities regulations (such as KYC/AML) into decentralized networks. Reports indicate that discussions involve establishing a regulated custody and settlement mechanism that ensures tokenized assets can leverage blockchain advantages (like T+0 real-time settlement) while maintaining investor protections comparable to traditional securities. BlackRock CFO Martin Small remains cautious about timelines, suggesting the process could take anywhere from 90 days to 12 months, reflecting the difficulty of establishing new compliance standards.

A New Era of DeFi Collateral

If iShares ETFs are successfully tokenized, the impact will extend far beyond trading convenience, injecting high-quality collateral into the DeFi market. Currently, DeFi lending protocols rely heavily on volatile cryptocurrencies as collateral, but tokenized U.S. Treasuries or stock ETFs could provide more stable value backing. This means investors might use tokenized S&P 500 ETFs as collateral for on-chain loans in the future, significantly improving capital efficiency.

Bitwise: Leading the Market Out of the Bear, Optimistic on Layer 1 Blockchains

Bitwise CIO Matt Hougan emphasized that such products could be pivotal in leading the market out of the bear phase and achieving deep integration between TradFi and DeFi. He also highlighted that increased on-chain asset liquidity bodes well for Layer 1 blockchains and DeFi prospects.

“I can’t tell you if it happens in 90 days or 12 months,” said Martin Small, CFO of BlackRock.

That’s 12 months at the outside.

If you’re wondering what narratives will lead us out of the bear market, this is one of them. Bullish Layer 1s and quite bullish DeFi imo. pic.twitter.com/Z40c22ZLGY

— Matt Hougan (@Matt_Hougan) February 11, 2026

This article about BlackRock’s plan to tokenize iShares ETFs and its potential to lead the market out of a bear phase first appeared on Chain News ABMedia.