Jenny Johnson, the CEO of Franklin Templeton, one of the biggest asset managers in the world, spoke at a recent CNBC Delivering Alpha event on the radical change taking place in the securitization industry. Tokenization, the process of transforming asset ownership rights into digital tokens on a blockchain, is what Johnson compared this change to as “securitization done on steroids.”
Johnson emphasized that the convergence of available capital and disruptive technology is drawing the attention of CEOs and companies towards futuristic investments like blockchain technology. She explained the benefits of tokenization, stating, “It allows a payment mechanism, smart contracts to be programmed into the token, and, because it’s a general ledger, it has a source of truth.”
Using the example of music icon Rihanna, who recently released an NFT collection tied to her songs, Johnson highlighted how blockchain technology can streamline royalty payments. When a Rihanna song plays on a platform like Spotify, the smart contract embedded in the NFT automatically triggers royalty payments, making the process efficient and transparent.
Furthermore, Johnson envisioned a future where athletes could tokenize a portion of their future revenue streams, offering fans a unique investment opportunity. She noted, “Think about athletes signing big contracts, selling tokens worth 10% of their future revenue stream. Fans would eagerly pay a premium for these tokens, making it a form of securitization taken to the next level.”
Franklin Templeton, a $1.5 trillion asset manager, is eagerly awaiting regulatory approval in the United States to launch a spot Bitcoin exchange-traded fund (ETF). The move underscores their commitment to embracing cryptocurrency and blockchain technology.
Joining Franklin Templeton in recognizing the potential of tokenization, BNY Mellon, the oldest bank in the United States, conducted a survey revealing that 70% of institutional investors would increase their digital asset activity if reputable institutions offered custody and execution services. The survey also predicted that the value of tokenized assets could skyrocket to $16 trillion by 2030.
Additionally, in April 2023, Christopher Waller, the governor of the Federal Reserve, expressed optimism about blockchain technology, smart contracts, and tokenization in the financial market. He highlighted how these innovations could significantly enhance efficiency in the financial sector, particularly in foreign-exchange trades.
As the cryptocurrency market continues to evolve and garner support from both traditional financial institutions and regulatory bodies, the potential for tokenization to revolutionize the way assets are managed and traded is becoming increasingly clear. Franklin Templeton’s CEO, Jenny Johnson, and other major players are leading the charge into this exciting future of finance.
