Senior BlackRock officials stated that tokenization will connect cryptocurrencies and traditional finance.

Former BlackRock CEO Larry Fink and executive Rob Goldstein believe that asset tokenization will become a crucial bridge between the cryptocurrency industry and the traditional financial sector, while expressing strong confidence in the outlook of this industry.

In an opinion piece published in The Economist on Monday, Fink and Goldstein argued that asset tokenization will not be able to replace the existing financial system overnight, but they predict this technology will help connect two seemingly opposing fields.

“Imagine it as a bridge being built from both sides of a river, meeting in the middle. On one side are traditional financial institutions, on the other are digital technology pioneers: stablecoin issuers, fintech companies, and public blockchains,” the two leaders wrote.

“The two sides are not competitors, but are gradually learning to coordinate and interact. In the future, investors will no longer have to separate stock and bond portfolios from crypto portfolios. Instead, all types of assets can be bought, sold, and stored through a single digital wallet.”

BlackRock is currently the world’s largest asset manager with a total asset value of $13.4 trillion. Fink, BlackRock’s co-founder and CEO, was once skeptical about cryptocurrency before changing his stance and becoming a strong supporter.

The traditional financial world has realized the real benefits of asset tokenization

Fink and Goldstein acknowledged that it was initially difficult to see the “core value” of asset tokenization, as this technology was swept up in the crypto boom, which was often highly speculative.

“However, in recent years, the traditional financial sector has started to see what lies beneath the hype: asset tokenization can significantly expand the range of investment products, far beyond the listed stocks and bonds that dominate the market today,” they commented.

BlackRock currently owns the largest tokenized money market fund in the world, valued at $2.8 billion. The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) was launched in March 2024.

Creating conditions for traditional finance and the tokenization market to grow together

However, Fink and Goldstein emphasized that the process of asset tokenization needs to be implemented safely and in compliance with appropriate regulations. This requires policymakers and regulators to update legal frameworks, enabling traditional and tokenized markets to coordinate effectively.

According to the two leaders, bond ETFs once played a role in connecting dealer markets with public exchanges, helping investors trade more efficiently. Now, with the emergence of spot Bitcoin ETFs, even digital assets have appeared on traditional exchanges. Each innovation contributes to building bridges of connection. This principle applies perfectly to asset tokenization.

“The regulatory system needs to aim for consistency: risks should be assessed based on their true nature, not on packaging. A bond is still a bond, even if it exists on a blockchain,” they concluded.

Mr. Giao