"Tokenization is the future for markets"

Key points:

BlackRock CEO Larry Fink said, “The next generation of markets, the next generation of securities will be tokenization of securities.”
Tokenization refers to the process of creating a digital representation of an asset on a blockchain.
Fink argued that tokenization would provide "instant settlement" and "lower fees".
The CEO said he believes most cryptocurrency-related companies "will disappear," although he said blockchain technology will be "very important."

Blackrock is the world's biggest assety manager

Blackrock is the world's biggest assets manager

BlackRock CEO Larry Fink said, “The next generation of markets, the next generation of securities will be tokenization of securities.”

In the blockchain world, tokenization refers to the process of creating a digital representation of an asset on a blockchain, verifying its transaction and ownership history.

This approach allows assets such as stocks, bonds, real estate, or even surrogate assets like land, wine, or art to be traded in different ways so that the transfer is visible on a public ledger.

Speaking at the New York Times DealBook event, Fink argued that tokenization would provide "instant settlement" and "lower fees". Despite the benefits, he added that developing the technology would not disrupt BlackRock's business model.

Beyond the promise of blockchain, the CEO touched on several hot-button economic issues, including the impact of the Russia-Ukraine conflict, China's shifting role, and global inflationary pressures affecting most advanced economies this year.

But it’s definitely not just BlackRock betting on tokenization as the future of financial services.

Flowcarbon, a startup led by former WeWork founder Adam Neumann to launch carbon credits, recently attracted $70 million from prominent investors including a16z, General Catalyst, and Samsung Venture Investment.

In November, JPMorgan approached Polygon to trade tokenized cash deposits in Singapore through Onyx Digital Assets, a private blockchain created by the bank.

The bank has also touted the benefits of tokenization in some of its white papers, noting that tokenization could lead to a more "public" delivery of financial services.

Despite his optimism about the future of tokenization, the CEO said he believes most cryptocurrency-related companies "will disappear," although he said blockchain technology will be "very important."

BlackRock hit by FTX contagion

Commenting on the FTX scandal that has affected the crypto market over the past month, he said that FTX's fatal mistake was to create its own token.

One of the initial triggers for FTX’s debacle was Binance’s sale of its large holdings of FTT tokens earlier this month, following reports of intense cross-pollination between FTX and its sister hedge fund, Alameda Research.

Fink clarified that his firm's investment in the bankrupt exchange was worth $24 million, though it was held in a "fund of funds" in a subsidiary rather than a "core part" of BlackRock's business.