Securitization, a practice with more than 50 years of history, is undergoing a dramatic transformation, believes Jenny Johnson, chief executive of Franklin Templeton, one of the world's largest asset managers.
During CNBC's Delivering Alpha event, Johnson noted that tokenization (the process of converting ownership rights to assets into digital tokens on a blockchain) is similar to “securitization on steroids,” a term often used to describe something that exceeds expectations.
Johnson's comments were part of a analysis of the future of alternative investment vehicles. The executive noted that available capital and technological disruption have attracted more companies and CEOs to invest in "things for the future," such as blockchain technology. Johnson said:
“One is that it allows a payment mechanism. Number two, it allows smart contracts to be programmed into the token. And three, because it is a ledger, it has a source of truth. So whoever has that token, all rights to that token are given to that person.”
Johnson used Rihanna as an example to illustrate his point. In February, the singer released one of his popular songs as a non-fungible token (NFT), allowing its holders to partially earn streaming royalties. “My favorite example is Rihanna,” he noted of the NFT collection launched just before the Super Bowl.
"I know you're just testing the market on these 300 NFTs [...]. Well, why can you do that? It can do this because when Spotify plays a Rihanna song, it can capture the smart contract, run it, and say, "I owe royalties here, so no one has to be involved in it." And you can take the split payment and go to Frank, a big Rihanna fan.”
Athletes can also benefit from tokenization, according to Johnson:
"Think [about] The athletes are going to sign a big contract. They will tell their fans: "I'm going to sell tokens worth 10% of my future income stream." I'm going to sell 100,000 tokens and boom, fans will probably pay a premium for it. So it will be one way and if you think about it, it is simply securitization on steroids.”
1/ The future is tokenized culture
"Franklin Templeton's Jenny Johnson Makes It On CNBC 'Delivering Alpha'".
- Tokenization = Securitization on steroids
- Tokenization of cultural intellectual property through NFT Royalty Streams.
Rhianna is creating modern-day 'Bowie Bonds' for fans who can... pic.twitter.com/Vrfqyne7SM
– Ram Ahluwalia, Highest for Longest Crypto CFA (@ramahluwalia) September 30, 2023
Johnson has worked at Franklin Templeton for more than 30 years and currently serves prominently in the company's executive leadership as president and CEO. Franklin, a $1.5 trillion asset manager with offices around the world, is one of the companies awaiting regulatory approval in the United States for a spot Bitcoin exchange-traded fund (ETF).
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