Matt Hougan, Chief Investment Officer at Bitwise, has highlighted a new institutional narrative forming in crypto. In an X post today, Hougan noted that people are “significantly underestimating how bullish tokenization is for DeFi,” referencing recent developments involving BlackRock. “If you’re wondering what narrative will lead us out of the bear market,” Hougan wrote, “this is one of them.”
How BlackRock Is Engaging With DeFi
According to a Fortune report, BlackRock has expanded its on-chain footprint with plans to migrate its Treasury-backed digital token, BUIDL, onto Uniswap and has acquired exposure to Uniswap’s governance token, UNI. Following the announcement, UNI surged 30% to become the top gainer among large caps earlier today.
At the same time, the firm is in discussions with regulators regarding the potential tokenization of its iShares ETF products. Martin Small, BlackRock’s CFO, indicated that the timeline for further developments could range from 90 days to 12 months. That window suggests active exploration rather than simple experimentation.
These developments are especially significant for the DeFi-institutional integration they promise. BlackRock is the world’s largest asset manager. Its engagement with DeFi and tokenization represents a structural bridge between traditional finance and blockchain-based infrastructure.
Why Tokenization Could Be Structurally Bullish for DeFi
Unlike previous cycles fueled primarily by speculation, tokenized securities introduce assets already embedded in global financial markets. This changes the composition of on-chain activity from largely crypto-native instruments to hybrid TradFi-DeFi products.
For instance, if iShares ETFs were tokenized, they would trade on-chain, settle through smart contracts, and interact with DeFi protocols. Such a development would expand the total addressable market for DeFi dramatically. That, in turn, would increase on-chain liquidity, deepen market participation, and legitimize DeFi as financial infrastructure rather than speculative experimentation.
For Layer 1 blockchains and smart contract infrastructure such as Ethereum, which currently dominates real-world asset tokenization, increased settlement demand would prove beneficial. DeFi protocols like Uniswap may also gain from higher transaction volume and integration opportunities.
Current Market Context Supports DeFi Rotation
The timing of these developments is also notable. The crypto market remains under pressure, with liquidity tighter than in previous expansion phases. Capital has increasingly concentrated in Bitcoin and regulated ETF products, while risk appetite across smaller tokens has waned.
In this environment, narratives often shift from speculation to sustainability and tokenization fits the box neatly. This follows a broader trend of regulated on-chain finance, aligning with institutional compliance frameworks rather than retail-driven volatility. If the current cycle evolves into a utility-first phase, tokenization could become one of its defining themes.
What Happens Next
The next 90 days to 12 months will be critical. Regulatory discussions with the SEC will determine how and when tokenized ETFs can operate within existing securities law. If BlackRock does proceed from exploratory engagement to scaled implementation, it could mark a turning point for DeFi adoption.
Whether tokenization becomes the core driver of the next bull market or remains a parallel institutional track is still uncertain. But for now, Hougan’s thesis underscores a growing belief that crypto’s next expansion may be less about hype and more about plumbing.
Temitope Olajide
The CoinRemark Team
