BlackRock’s most senior executives say the financial system is on the brink of the biggest infrastructure overhaul since the advent of electronic messaging in the 1970s, powered by blockchain-based tokenization.
In the new column, economistBlackRock CEO Larry Fink and Chief Operating Officer Rob Goldstein said the financial industry is on the cusp of “the next big evolution in market infrastructure” that could move assets “faster and more securely than the systems that have served investors for decades.”
tokenization It records ownership of assets on a digital ledger, allowing stocks, bonds, real estate, and other holdings to exist as verifiable digital records that can be traded and settled without traditional intermediaries.
Management’s views apply perfectly to BlackRock’s tokenization plans. Reminds me of Mr. Fink’s 2022 statement “The next generation of markets, the next generation of securities, will be the tokenization of securities.”
“Initially, this big idea was difficult for the financial community, including us, to understand,” the two wrote, noting that tokenization was “caught up in a crypto boom that often looked like speculation.”
But behind the noise, “tokenization vastly expands the universe of investable assets” and “offers the possibility to settle transactions instantly” while replacing “manual processes, bespoke payments and records that have not kept pace with other parts of finance.”
Executives at the world’s largest asset management firm cautioned that the technology would not immediately replace existing systems, but instead described it as a “bridge from both sides of the river” connecting traditional institutions and digital-first innovators.
Multi-cycle transition
said Joshua Chew, lawyer and co-chairman of the Hong Kong Web3 Association. decryption “While the direction for tokenization to be part of the ‘next generation of markets’ is probably correct, the implied timing is potentially too compressed in my view,” BlackRock said.
“This is not a one-cycle revolution where everything will be tokenized by next year, but a multi-cycle transition with more limited and well-regulated use cases over time,” Chu said. “That’s just not how innovation works.”
While he said that “tokenization undoubtedly plays an important role in modern finance,” he stressed that tokenization “can only gain value if it solves real problems that cannot be solved by mundane structures,” such as reducing payment risk, increasing the liquidity of collateral, or opening up access to assets that were previously inaccessible.
Growing but still in early stages
Tokenized financial assets remain a small part of the global stock and bond markets. Still, Fink and Goldstein noted that it’s expanding rapidly, up about 300% in the past 20 months, comparing today’s stage to “the Internet in 1996,” when Amazon was selling just $16 million worth of books.
The world’s largest asset manager is already building for that future with BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). debuted last year It has grown to $2.3 billion, making it one of the world’s largest tokenized assets. RWA.xyz data.
“All assets need to be tokenized, especially those where there are multiple levels of intermediaries.” Fink told investors: On BlackRock’s third-quarter earnings call, it cited real estate as an area where technology can cut costs and improve affordability by cutting out layers of middlemen.
