Yesterday, BlackRock Chairman Larry Fink discussed the potential of asset tokenization in his annual letter. He noted that digital assets present opportunities to enhance efficiencies in capital markets, reduce value chains, and improve cost and access for investors. As part of its exploration into this space, BlackRock has been involved in cryptocurrency activities and tokenizing BlackRock money market fund shares for use in JP Morgan’s blockchain-based collateral management system. His comments reflect the shifting focus of the asset management industry from cryptocurrencies to tokenized assets, partially due to the FTX collapse and subsequent cryptocurrency fallout.
Several fund distribution companies have been involved in blockchain for years. However, last year saw a surge of interest from prominent asset managers such as Abrdn, Apollo Global, Hamilton Lane, and KKR, as well as fund administrator Apex. In addition, BlackRock is making strides in the crypto market by managing a money market fund with more than $30 billion in U.S. Treasury reserves for the USDC stablecoin and enabling clients to invest in cryptocurrencies via Coinbase. It also runs various crypto- and metaverse-focused ETFs.
Fink commented that developing markets such as India, Brazil, and Africa are already beginning to reap cost benefits from digital payments while many developed countries, including the U.S., are lagging in innovation and still experiencing relatively high payment costs.
“In particular, tokenizing asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors. At BlackRock, we continue to explore the digital assets ecosystem, especially areas most relevant to our clients, such as permissioned blockchains and tokenization of stocks and bonds.”Larry Fink, BlackRock CEO
BlackRock CEO Larry Fink has expressed that the digital asset industry is developing and maturing but also highlighted its associated risks. He further concluded on the need for regulation in the crypto market and BlackRock’s commitment to maintaining its standards of operational excellence by applying the same controls to digital assets as it does across its business.