The new framework allows bond ETFs to offer in-kind redemption which is not possible with traditional ETFs as bond ETFs have thousands of securities with different dates and rates and the only option is cash redemption.
Remember in a traditional ETF they have to sell the bonds before a cash redemption which means taking a tax hit. In-kind redemptions mean no taxable event has taken place. Huge advantage.
With a tokenized ETF the underlying bonds themselves are tokenized so when you do an in-kind redemption you are sent the basket of individual tokens representing each bond. Now redeeming those tokens for cash becomes the end users problem not the ETF AP’s
The ETF can also hold a basket of anything that has been tokenized not just bonds. The magic is in the automatic redemption process.