Tokenization is “securitization done on steroids" — Franklin Templeton CEO

By definition Tokenization is the process of converting asset ownership rights into digital tokens on a blockchain.

During CNBC’s Delivering Alpha event, Johnson’s remarks happened to be part of an analysis of the future of alternative investment vehicles. The executive noted that available capital and technology disruption have been attracting more companies and CEOs to invest in “things for the future,” like blockchain technology. Johnson said “One is it allows a payment mechanism. It allows smart contracts to be programmed into the token. And three, because it’s a general ledger, it has a source of truth.

A super star in the name of Raihana was used as a case study. In February, the singer released one of its popular songs as a nonfungible token (NFT), allowing holders to partially earn royalties on streaming. “My favorite example is Rihanna,” she noted about the NFT collection launched just before the Super Bowl.

“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 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.

Athletes can also benefit from tokenization, according to Johnson.

“Think [about] athletes 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 it. So it will be a way and if you think about it, it’s just securitization done on steroids.”

Johnson sits at the top of the company’s executive leadership as president and CEO. Franklin, a $1.5 trillion asset manager with offices across the world, is one of the companies waiting for regulatory approval in the United States for a spot Bitcoin exchange-traded fund (ETF).