Enterprise software company Oracle (ORCL) in recent days formed a partnership with a company that will bolster its blockchain-related services, and Bank of America launched a cryptocurrency research team — the latest signs of major companies embracing decentralized finance.
Blockchain could claim another believer among the country’s top financial institutions in Franklin Templeton (BEN) CEO Jenny Johnson, whose fund manages more than $1.5 trillion in assets.
Johnson told Yahoo Finance in a recent interview that blockchain technology will be “hugely disruptive,” eventually allowing ordinary people to make small investments in otherwise inaccessible assets such as large real estate projects. But she acknowledged that she is not a “big fan” of bitcoin (BTC-USD), citing the cryptocurrency’s volatility.
“The tokenization and blockchain will be hugely disruptive to the financial services industry,” she says. “We’re in the very, very early stages of that.”
“I’m not even sure people fully understand how disruptive that can be,” she adds. “It’s something I spend a lot of time on – my team spends a lot of time – just trying to think and understand.”
Blockchain, a digital ledger that records transactions without a centralized manager, allows for the sale and acquisition of assets such as cryptocurrencies or non-exchangeable tokens, known as NFTs. The technology has come to prominence as the backbone behind the widely known but divisive digital currency bitcoin.
Berkshire Hathaway (BRK-A, BRK-B) CEO Warren Buffett described bitcoin as “rat poison” in 2018, and a study conducted by JPMorgan Chase (JPM) last month found that a third of regular investment firms agree with Buffett’s characterization.
But major financial institutions have warmed to blockchain, including a unit at JPMorgan Chase dedicated to projects incorporating the technology.
Johnson, who became CEO of Franklin Templeton last February, told Andy Serwer, editor-in-chief of Yahoo Finance, that blockchain gives everyday investors access to illiquid assets, such as real estate projects or sports teams, that would otherwise remain available only to the wealthy.
“One of the things we’ve seen over the past decade, let’s face it, Andy, if you had money and you’re a qualified investor, and you could take advantage of illiquidity premiums in alternative assets, you were doing better than the average person,” she says. “Which, by the way, is a problem.”
“If you own the Empire State Building, you could sell it to a million people — probably get a higher return because you can sell it to a lot more people — and then they can start selling it without citing the title company and all.” those intermediaries, because the entire contract, including who manages that building, is built into the token.”
“That gets really interesting and starts unlocking these illiquid assets,” she adds.
Johnson, the granddaughter of Rupert Johnson, founder of Franklin Templeton, began working in the investment fund mailroom at the age of 14 while on vacation. After a stint at Drexel Burnham, she joined Franklin Templeton in the late 1980s, where she held various leadership roles before becoming CEO.
Speaking to Yahoo Finance, Jenny Johnson acknowledged that her enthusiasm for blockchain does not extend to bitcoin. She noted the dramatic drop in the cryptocurrency earlier this year, not long after it reached new heights thanks to public support from Tesla (TSLA) CEO Elon Musk.
“As for the digital assets, I think of things like bitcoin — I’m not a big fan,” she says. “Obviously it was wrong in so many ways, although you could have lost 50% if you had bought into some kind of peak noise, pre-Elon Musk’s tweet.”