JPMorgan says ETF tokenization is early but will impact broader funds industry

JPMorgan: "ETF tokenization is still early but will impact the broader funds industry" in its lastest market commentary. Key takeaways:

1️⃣ ETF Growth Trend Points Upward

Global ETF AUM is expected to reach $35T by 2030 up from $19.5T

This scale increase is forcing participants toward:

- automated trade processing

- API-driven workflows

- integrated OMS / EMS systems

- richer lifecycle reporting

"ETF is a wrapper delivering flexibility, diversification, transparency and cost efficiencies, all driven by technology." - Ciarán Fitzpatrick, Global Head of ETF Product.

2️⃣ ETF Electronification is the Immediate Priority

Two factors driving ETF electronification:

- Rise of active ETFs: 83% of new ETF launches in 2025 were active products, which require richer data, tighter controls and more automated workflows

- 50% of J.P. Morgan's ETF primary market flow now comes via APIs

This means:

- Authorized Participants increasingly submit create/redeem orders electronically via proprietary OMS systems

- Workflow automation is materially penetrating institutional ETF plumbing

In JPMorgan’s 10th annual e-trading survey, respondents said they expect ETFs to see the most developments in electronification in 2026 compared with other products.

3️⃣ Tokenized ETFs are Real, But Still Early

Tokenization will likely become part of ETF ecosystem. But meaningful use cases are still “a couple of years away” and the immediate priority remains the electronification of the ETF plumbing system.

JPMorgan distinguishes between two tokenization models:

- Native Tokenized ETFs: onchain primary creation and redemption

- Synthetic Tokenized ETFs: blockchain wrappers/derivatives referencing ETF performance

👉 Bottom Line

JPMorgan clearly sees native tokenization as the more structurally important end-state as it streamlines creation/redemption, enables 24/7 market access, unlocks near-instant settlement and lowers intermediary/operational costs.

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