BlackRock’s plan to tokenize its flagship iShares ETF lineup has sparked a lively reaction from the crypto community, with analysts calling the development a key catalyst that could lift the crypto market out of its prolonged slump.
The latest developments reveal that BlackRock is in active discussions with the U.S. Securities and Exchange Commission (SEC) to move its flagship iShares ETF to blockchain rails.
If successful, this could lead to the creation of programmable 24/7 settlement ETF tokens that can be used as collateral for DeFi protocols. However, this remains uncertain, with BlackRock’s chief financial officer Martin Small admitting he could not say whether the process would be completed “within 90 days or within 12 months.”
“We don’t know if it’s going to happen in 90 days or in 12 months,” said Martin Small, BlackRock’s chief financial officer.
12 months outdoors.
If you’re wondering what stories will lead us out of the bear market, this is one of them. Bullish L1 and very bullish DeFi imo. pic.twitter.com/Z40c22ZLGY
— Matt Hougan (@Matt_Hougan) February 11, 2026
Tokenized ETF promises 24/7 settlement and DeFi integration
For the iShares ETF (which represents holdings in stocks, bonds, and other traditional securities), tokenization allows investors to trade, transfer, or use these assets as collateral for DeFi lending protocols without leaving their digital wallets.
Matt Hougan, Bitwise Chief Investment Officer, said: I will consider He said the move is transformative and that it is “one of the key narratives to guide the market out of the bear market,” stressing that this development is “very positive for Layer 1 blockchain and the decentralized finance (DeFi) sector.”
As such, tokenized iShares could serve as a base layer for potential new collateral backed by regulated cash flows and established issuers.
BlackRock CEO Larry Fink previously called tokenization “one of the most exciting areas of growth in financial markets” during an earnings call.
BlackRock, the world’s largest asset manager, sees the approximately $4 trillion held in digital wallets across crypto assets, stablecoins, and tokenized assets as a major growth opportunity, especially for younger investors who are already comfortable with tokenized assets but lack access to high-quality traditional investment programs.
Other analysts have suggested that BlackRock’s tokenized iShares will likely run on an established blockchain network like Ethereum, or potentially other private/permissioned blockchains, as infrastructure choice is important to ensure scalability and security.
Is Bitwise’s pivot strategy due to Bitcoin?
This tokenization strategy is offered as one of the means to weather a bearish crypto market. Bitcoin is currently Trading around $66,000down about 4.57% in the past 24 hours, with a trading volume of about $47 billion. With Ethereum trading at about $2,000 per token (down about 5%) and Solana trading at about $78 (down about 6.5%), many companies with exposure to crypto assets are looking for ways to survive during highly volatile times.
Hogan told investors that he expects Bitcoin to settle between $75,000 and $100,000 in the first half of 2026, but surge to record highs in the second half as lower interest rates, flows to institutional investors, and lower volatility replace the usual four-year cycle pattern.
But for Bitwise, which trades Bitcoin, Ethereum, Solana, and the XRP ETF (as well as its Crypto Industry Innovators Equity Fund), the wave of tokenization brings both opportunities and competitive pressures.
The company has already Model portfolio solution for digital assets (now available to multi-billion dollar advisory firms) earlier this month. This gives financial advisors a more structured framework for allocating crypto assets through ETFs.
The race to capture $4 trillion in digital wallet capital is on
The strategic importance of tokenized traditional assets goes beyond just adding blockchain payments to existing assets. BlackRock’s strategy targets critical gaps. That means $4 trillion is sitting in the digital wallets of users who want to stay in the crypto world, but can’t access stocks, bonds, or diversified ETFs without converting their assets back to regular currencies or using more traditional methods.
“If we can align our business plan around the tokenization of ETFs, the heavy users of tokenized assets are young people, and we can introduce more traditional assets to them earlier in their lives,” Fink explained during BlackRock’s earnings call.
For crypto platforms like Bitwise, the challenges are clear. BlackRock’s $10 trillion in assets under management, along with its dominant iShares brand, could quickly boost the market share of tokenized products, perhaps repeating the pattern that occurred with Bitcoin ETFs.
BlackRock’s iShares Bitcoin Trust (IBIT) is currently the fastest growing ETF in history, amassing over $70 billion in assets.
According to RWA.xyz, the decentralized asset value of the tokenized real-world asset market has reached nearly $25 billion in on-chain value, with private credit institutions and US Treasury-backed products emerging as early adopters.
Other large asset managers such as Fidelity, Franklin Templeton, and Goldman Sachs are also expected to accelerate their tokenization strategies.
As blockchain technology continues to mature, Hogan’s theory that tokenization will help cryptocurrencies exit this bear market may prove correct. Nevertheless, for now, with billions of assets and the future of digital finance at stake, this race sits comfortably at the intersection of traditional financial credibility and cryptocurrency circulation.
