Author: Larry Fink (BlackRock CEO) & Rob Goldstein (BlackRock COO)
Original title: Larry Fink and Rob Goldstein on how tokenization could transform finance
Fifty years ago, funds needed to be mailed to get around.
Twenty years ago, cross-border transactions would take "a few days".
Today, transactions at the millisecond level are no longer something to boast about.
The real change is not about speed, but about reshaping "the way assets exist".
BlackRock CEO Larry Fink and COORob Goldstein offered a sober assessment of this era: In the future, stocks, bonds, real estate, funds, and even currencies will all become "a line of code on the blockchain."
This is not a crypto story; this is a “restructuring moment” for finance.
Fifty years ago, money moved as slowly as mail. When one of us (Larry) started his career in 1976, transactions were conducted by telephone and settled with paper receipts sent by courier. In 1977, a technology called SWIFT enabled standardized electronic messaging between banks, reducing transaction times from days to minutes. Today, transactions between New York and London are executed within milliseconds.
The financial industry is now entering the next major evolution of market infrastructure—an evolution that will allow assets to be transferred faster and more securely than the systems that have served investors for decades. It began in 2009 when a developer using the pseudonym Satoshi Nakamoto launched Bitcoin, a shared digital ledger that records transactions without intermediaries. A few years later, the same technology—blockchain—has given rise to something even more transformative: tokenization.
Tokenization involves recording ownership on a digital ledger. It allows virtually any asset, from real estate to corporate debt or currency, to exist on a single digital record that participants can independently verify. Initially, the financial world—including us—struggled to grasp this grand idea. Tokenization was intertwined with the crypto craze, which often appeared speculative. But in recent years, traditional finance has seen what lies beneath the hype: tokenization can dramatically expand the world of investable assets, going beyond the currently dominant listed stocks and bonds.
Tokenized assets offer two major benefits. First, they provide the potential for instant settlement of transactions. Today's markets operate on different settlement timelines, exposing buyers and sellers to the risk that one party may be unable to fulfill its obligations. Standardizing instant settlement in global markets would be another leap forward, surpassing what SWIFT has already achieved.
Secondly, private equity assets remain heavily reliant on paper transactions—manual processes, custom settlements, and a track record that has failed to keep pace with other parts of the financial industry. Tokenization can replace paper with code, reducing the friction that makes asset transactions costly and slow. It can transform large, unlisted holdings such as real estate or infrastructure into smaller, more accessible units, thereby expanding market participation that has long been dominated by large institutions.
Technology alone cannot eliminate all obstacles. Regulation and investor protection remain crucial. However, by reducing costs and complexity, tokenization can provide more investors with more ways to diversify their investments. Early signs of progress are already emerging. Tokens representing traditional “real-world” financial assets (stocks, bonds, etc.) still represent a small share of the global stock and fixed-income markets, but are growing rapidly—up by approximately 300% in the past 20 months.
Much of early adoption occurred in the developing world, where banking services were limited. Nearly three-quarters of cryptocurrency holders reside outside the West. Meanwhile, the economies that built modern finance—the US, UK, and EU—are lagging behind, at least in terms of where transactions take place. Admittedly, many of the companies most likely to lead the transformation of the tokenized financial system, including the dominant players in the stablecoin space, are US companies. But this early advantage is not to be taken for granted.
If history is any guide, today's tokenization is roughly equivalent to the internet in 1996—when Amazon sold only $16 million worth of books, and three of today's "Big Seven" tech giants haven't even been established yet. Tokenization may develop at the pace of the internet—faster than most people expect, achieving tremendous growth in the coming decades.
It won't replace the existing financial system anytime soon. Instead, it can be seen as a bridge being built simultaneously from both sides of a river, converging in the middle. On one side are traditional institutions. On the other side are digital-first innovators: stablecoin issuers, fintech companies, and public blockchains.
Rather than competing, the two are learning how to interoperate. In the future, people won't put stocks and bonds in one portfolio and cryptocurrencies in another. One day, various assets will be able to be bought, sold, and held through a single digital wallet.
The task of policymakers and regulators is clear: to help build this bridge quickly and safely. The best approach is not to create a completely new rulebook for digital markets, but to update our existing rules so that traditional markets and tokenized markets can work together.
We've already seen the power of this connectivity. The first emerging market exchange-traded funds (ETFs) linked stock markets from more than 20 countries into a single fund, making global investing much easier. Bond ETFs did the same for fixed income, connecting dealer markets with public exchanges, enabling investors to trade more efficiently. Now there are spot Bitcoin ETFs, and even digital assets are on traditional exchanges. Every innovation is building bridges.
The same principle applies to tokenization. Regulators should strive for consistency: risk should be judged by its nature, not by how it is packaged. Even if a bond exists on the blockchain, it is still a bond.
But innovation needs "guardrails": clear buyer protection measures to ensure that tokenized products are safe and transparent; strong counterparty risk standards to prevent shocks from spreading to the platform; and digital identity verification systems so that those who want to trade and invest can have the same confidence as when swiping a card or making a wire transfer.
In his new book about the 1929 stock market crash, Andrew Ross Sorkin revisits the failures that led to the birth of the modern financial system. Some were technical: on "Black Tuesday," stock tickers lagged behind by hours, unable to keep up with the surge in trading volume. Others were institutional: a financial system that developed faster than its security guarantees could keep pace.
Tokenization can modernize the infrastructure that still makes parts of the financial system slow and expensive, bringing more people into the world's most powerful engine of wealth creation: the markets. However, as we learned in 1929, every step towards increased participation must be accompanied by updated security safeguards. Tokenization must achieve two things: faster growth and secure growth, while simultaneously building trust.
