Former crypto skeptic BlackRock CEO Larry Fink and COO Rob Goldstein say tokenization will provide a bridge between the cryptocurrency industry and conventional finance, doubling down on their support for the sector.
In an article written by Fink and Goldstein and published Monday in The Economist, they both he said that tokenization will not replace the existing financial system any time soon, but predicts that it will lend a hand connect the two industries.
“Instead, think of it as a bridge being built on both sides of a river, converging in the middle. On one side are traditional institutions. On the other are digital-first innovators: stablecoin issuers, fintechs and public blockchains,” they both wrote.
“These two things are not so much competing as learning to work together. In the future, people won’t keep stocks and bonds in one wallet and cryptocurrencies in another. One day, all kinds of assets will be able to be bought, sold and stored through a single digital wallet.”
BlackRock is the world’s largest asset management company, with over $13.4 trillion in assets under management. Its co-founder and CEO, Fink, was previously a cryptoskeptic before changing his mind.
The financial world can finally see the benefits of tokenization
Fink and Goldstein said at first glance they had a difficult time seeing the “big idea” because tokenization was caught up in a cryptocurrency boom that “often looked like speculation.”
“But in recent years, traditional finance has seen what was hidden beneath the noise: Tokenization has the potential to significantly expand the world of investable assets beyond the publicly traded stocks and bonds that currently dominate markets,” they added.
BlackRock already has the largest tokenized cash market fund at $2.8 billion. The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) was launched in March 2024.
Regulators should enable TradFi and tokenized marketplaces to work together
However, Fink and Goldstein also said that tokenization must be done securely and in accordance with appropriate regulations, requiring policymakers and regulators to update rules to allow conventional and tokenized markets to work together.
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Exchange-traded funds (ETFs) have followed a similar path for fixed-income funds, connecting dealer markets with public exchanges, allowing investors to trade more efficiently, according to Fink and Goldstein.
“And now, thanks to Bitcoin ETFs, even digital assets are listed on traditional exchanges. Each of these innovations builds bridges. The same principle applies to tokenization,” they said.
“Regulators should strive for consistency: risk should be assessed on the basis of what it is, not how it is packaged. A bond is still a bond, even if it lives on the blockchain.”
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