BlackRock’s Fink says tokenization of asset classes could drive efficiencies in capital markets

Larry Fink’s annual letter to BlackRock shareholders once again included his thoughts on digital assets, with the chief executive surprisingly optimistic about the space in light of recent events. 

Beyond the media’s “obsession” with bitcoin and the collapse of FTX, there are several areas of interest to BlackRock, Fink wrote on Wednesday. Advances in digital payments across emerging markets, how this contrasts with developed markets, and the promise of tokenization were among the topics addressed.

“In many emerging markets – like India, Brazil and parts of Africa – we are witnessing dramatic advances in digital payments, bringing down costs and advancing financial inclusion,” the CEO wrote. India is currently exploring a central bank digital currency, and just last month MetaMask integrated with an Indian provider of crypto-to-fiat on-ramp services.

The developments across these regions contrast with sluggish advancements in developed markets, he noted. Wealthier nations, including the U.S., are “lagging behind in innovation, leaving the cost of payments much higher,” according to Fink.

Tokenization

As for the asset management industry, the operational potential of the underlying technologies in digital assets could have “exciting applications.”

“In particular, the tokenization of asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains and improving cost and access for investors,” Fink told shareholders. 

The world’s biggest asset manager, with around $8.6 trillion in assets under management, will continue to explore the digital asset ecosystem, “especially areas most relevant to our clients such as permissioned blockchains and tokenization of stocks and bonds,” its CEO said. 

Don’t expect BlackRock to rush to market with anything just yet, though; Fink’s letter was quick to caveat the promise offered by digital assets.

“While the industry is maturing, there are clearly elevated risks and a need for regulation in this market. BlackRock is committed to operational excellence, and we plan to apply the same standards and controls to digital assets that we do across our business,” he concluded. 

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