April 19, 2024
Franklin Templeton CEO Jenny Johnson's Insights on Tokenization and the Future of Finance
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Franklin Templeton CEO Jenny Johnson’s Insights on Tokenization and the Future of Finance

According to Jenny Johnson, CEO of Franklin Templeton, one of the biggest asset managers in the world, securitization, a process with over 50 years of experience, is going through a drastic transition.

Johnson compared tokenization, the process of transforming asset ownership rights into digital tokens on a blockchain, to “securitization done on steroids,” a phrase frequently used to describe anything that surpasses expectations, during the CNBC Delivering Alpha event.

An examination of the prospects for different investment vehicles included Johnson’s comments. The executive stated that more businesses and CEOs are investing in “things for the future,” such as blockchain technology, as a result of increased access to money and technological disruption.

“One is that it allows a payment mechanism. Number two, it allows smart contracts to be programmed into the token. And three, because it’s a general ledger, it has a source of truth. So whoever has that token, all rights in that token are granted to that person.”

Jenny Johnson, CEO of Franklin Templeton

Johnson cited Rihanna as an example to support her argument. The artist issued one of her well-known songs as a nonfungible token (NFT) in February, enabling holders to receive a portion of streaming revenues. Regarding the NFT line that was unveiled right before the Super Bowl, she said, “My favourite example is Rihanna.”

“I know she’s just testing the market in these 300 NFTs […] Well, why can she do that? She can do it because when Spotify plays a Rihanna song, it can capture the smart contract, execute it, and say: ‘I owe royalties here, so nobody has to be involved in it.‘ And it can take the fractional payment and go to Frank, a big Rihanna fan.”

Tokenization can also be advantageous for athletes.

“Think [about] athletes who are going to sign a big contract. They’ll say to their fans, ‘I’m going to sell off tokens worth 10% of my future revenue stream.‘ I’m going to sell 100,000 tokens and boom, the fans are probably going to pay a premium for them. So it will be a way, and if you think about it, it’s just securitization done on steroids.” Johnson stated.

Johnson has worked at Franklin Templeton for more than 30 years, and as president and CEO, he is now in charge of the executive team. One of the businesses awaiting regulatory permission in the US for a spot Bitcoin exchange-traded fund is Franklin, a $1.5 trillion asset manager with offices throughout the world.

Image: Wikimedia Commons

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