BlackRock CEO: Tokenization to Trigger Finance’s Biggest Overhaul Since the 1970s — Here’s How
Larry Fink just dropped the mic on traditional finance. The BlackRock CEO claims tokenization will reshape the financial world more than any innovation since the 1970s—a period that gave us money market funds and the dawn of electronic trading. This isn't just another crypto hype cycle; it's a structural shift.
The 24/7 Market Machine
Forget 9-to-5 trading. Tokenization slashes settlement times from days to seconds, unlocking capital trapped in legacy systems. It bypasses the traditional custodial gatekeepers, putting assets on a transparent, programmable ledger. Imagine real estate, private equity, and even fine art trading with the liquidity of a tech stock.
Cutting Out the Middleman (and Their Fees)
The real revolution isn't just speed—it's disintermediation. Smart contracts automate compliance and execution, collapsing layers of brokers, custodians, and administrators. This strips out staggering inefficiency costs, a silent tax the finance industry has levied for decades. Some old-guard institutions might need to find a new raison d'être beyond collecting rent.
From Wall Street to Every Street
This overhaul extends beyond institutional playgrounds. Fractional ownership becomes trivial, democratizing access to asset classes once reserved for the ultra-wealthy. A global, interoperable system for value emerges—provided regulators don't try to force a square peg into a round hole built for the last century.
The 1970s overhaul was about digitizing paper. This one is about programmability, transparency, and access. The financial system is getting a full-stack rewrite. The only question is who will be left debugging the legacy code.
Tokenization Offers Efficiency, But Experts Warn of Market Fragility
Tokenization, which records ownership of assets on digital ledgers, allows stocks, bonds, real estate, and other holdings to exist as verifiable digital records that can be traded and settled without traditional intermediaries.
The approach aligns with BlackRock’s long-standing commitment to digital markets, dating back to Fink’s 2022 remarks that the next generation of securities will be tokenized.
Fink and Goldstein acknowledged that tokenization was initially overshadowed by the speculative crypto boom.
Yet, beneath the noise, the technology has the potential to expand investable assets and enable near-instant settlement, reducing reliance on manual processes and bespoke recordkeeping that have persisted for decades.
The executives cautioned, however, that adoption will be gradual, likening the process to a “bridge being built from both sides of a river,” connecting traditional financial institutions with digital-first innovators.
While tokenization promises efficiency and broader market access, it also carries risks that could mirror historical financial shocks.
Analysts point to several mechanisms that could amplify losses.
Increased systemic interconnectedness could make widely shared ledgers a single point of failure, while automated trading on programmable ledgers could accelerate market shocks, potentially triggering rapid “flash crashes.”
Legal ambiguities surrounding ownership rights and settlement finality, coupled with cybersecurity vulnerabilities, could exacerbate operational risks.
Additionally, fragmented markets, high leverage, and concentration of infrastructure among a few dominant players may increase systemic fragility.
Experts warn that a large-scale operational failure or confidence crisis could produce losses reminiscent of the post-Bretton Woods era in the early 1970s.
Tokenized Markets Grow Fast; EU Warns Oversight Crucial for Stability
European regulators are increasingly focused on the growth of tokenized financial assets, balancing innovation with oversight.
Natasha Cazenave, Executive Director of ESMA, outlined the potential and risks of wrapping conventional instruments in digital layers.
ESMA’s Natasha Cazenave has outlined how tokenization has reshaped EU markets and raised legal and investor protection questions.#RWA #Tokenization https://t.co/aqNvntO52N
Once a niche area, tokenized assets now represent a global market of roughly $600 billion, with the issuance of tokenized fixed-income instruments exceeding €3 billion in 2024.
The Skynet RWA Security Report projects that tokenized real-world assets could reach $16 trillion by 2030, with Europe positioned to lead.
Skynet projects RWA tokenization to hit $16T by 2030, with institutions driving growth amid ongoing security and access challenges.#rwa #tokenizationhttps://t.co/1wYJ0aw4fl
Pilot projects by Société Générale, Santander, the European Investment Bank, and Germany’s Ministry of Finance demonstrate growing interest, though the market remains fragmented.
Cazenave emphasized that regulatory alignment is critical to ensure investor protections and prevent instability.
Globally, tokenization is reshaping access to private markets. Institutional investors expect tokenized instruments to make up 10–24% of portfolios by 2030.
@StateStreet says tokenized assets could account for 10%–24% of institutional portfolios by 2030, with private equity leading adoption.#StateStreet #Tokenization https://t.co/M1SisAWT3s
Currently, digital assets average 7% of institutional holdings, expected to rise to 16% within three years, driven by tokenized equities, fixed income, and digital cash, according to State Street research.
Challenges remain on the issuer side. Infrastructure for identity verification, compliance, and cap-table management lags behind front-end trading platforms, slowing onboarding, complicating reconciliation, and limiting secondary market liquidity.
Authorities worldwide are taking note. In November, the IMF highlighted tokenization’s potential to accelerate transactions and reduce costs, while cautioning that automated markets could amplify volatility and systemic risks.
UK appoints digital lead to coordinate financial market tokenization, signaling institutional interest in blockchain-based infrastructure.#uk #tokenizationhttps://t.co/SAU9U8go3N
Notably, in the UK, a “digital markets champion” and the Dematerialisation Market Action Taskforce are overseeing the issuance of digital gilts on distributed ledgers.
Data from RWA(.)xyz shows the distributed asset market currently represents $18.41 billion, with $391.55 billion in represented asset value across more than 555,000 asset holders.
