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BlackRock CEO Larry Fink says blockchain-based tokenization may lead to the biggest overhaul of the financial system since the launch of SWIFT’s interbank electronic messaging system in the 1970s.
In a column for The Economist, Fink and BlackRock COO Rob Goldstein said that traditional financial firms had initially dismissed tokenization, but now recognize that it is transformational.
“At first it was hard for the financial world — including us — to see the bid idea,” he said. “Tokenization was tangled up in the crypto boom, which often looked like speculation. But in recent years traditional finance has seen what was hiding beneath the hype: tokenisation can greatly expand the world of investable assets beyond the listed stocks and bonds that dominate markets today.”
Fink highlighted blockchain’s role, noting it can replace paper with code, reduce frictions, and turn large private-market holdings like real estate or infrastructure into smaller, more tradable units.
He said that would broaden “participation in markets long-dominated by large institutions” and argued that standardizing instantaneous settlements across global markets through tokenization “would be a leap beyond what SWIFT ever made possible.”
While he acknowledged that technological advancements alone won’t be enough to remove every barrier, and that regulation is also needed to protect investors, he said that tokenization will lower the cost and complexity in the market and provide investors “more ways to diversify.”
US Falling Behind In Tokenization Adoption, Fink Says
Fink said that much of tokenization’s adoption, around 75%, is coming from developing countries, “where banking access is limited.”
“Meanwhile, the economies that built modern finance – America, Britain and the EU – are falling behind, at least when it comes to where the trading is happening,” Fink said.
He warned that while the companies “best placed” to lead the tokenization shift, especially stablecoin companies, are American, the “early advantage isn’t guaranteed.”
Tokenization Won’t Replace Financial System Any Time Soon
Fink also highlighted the progress that the nascent industry has made, noting that tokens representing real-world assets on the blockchain have seen their capitalization soar roughly 300% in just the past 20 months.
Total on-chain value (Source: RWA.xyz)
He compared the current stage of the market to where the internet was in 1996, back when Amazon had sold just $16 million worth of books and three of today’s “Magnificent Seven” giants hadn’t even been founded.
The BlackRock CEO believes that the sector’s momentum will continue, and predicted that the space will grow “faster than most expect, with enormous growth over the coming decades.”
Although the tokenization space has seen rapid growth in recent months and Fink expects this momentum to continue, he did say that it won’t replace the traditional finance sector any time soon.
Instead, he believes tokenization is best viewed as a bridge that is “being built from both sides of the river, converging in the middle.” On one side are traditional financial institutions, while on the other are the digital-first innovators such as stablecoin issuers, fintechs, and public blockchains.
“The two aren’t competing so much as learning to interoperate,” he said.
Read more on InsideBitcoins.com
