Tokenization/9: BlackRock takes the field
(Every stock, every bond, every fund—every asset—can be tokenized)
After four months, we’re back to talking about tokenization, and the line above is not some mind-blowing claim posted on X by a finance nerd, but the heading of a section of the annual letter from BlackRock’s chairman to his shareholders.
Larry Fink is a leading figure in the financial world. In the 1980s he founded an asset manager, BlackRock of course, which in just under 40 years has become the largest in the world by assets under management. We’re talking about almost 10 trillion dollars, a little less than the total wealth of our country, Italy, estimated by adding up all its financial and real estate assets (NB: not the annual Gross Domestic Product (GDP), but the stock of all the wealth existing in Italy).
BlackRock thrilled the crypto world in 2023 by applying to the SEC (the US financial markets watchdog) for authorization of a Bitcoin investment fund (ETF).
It caused a stir because it was the first time a heavyweight financial institution had moved into the crypto field. The SEC, then led by G. Gensler, who was strongly hostile to the sector, approved the Bitcoin ETF, albeit reluctantly, in January 2024. The event, as you’ll remember, triggered the rally in the price of the leading cryptocurrency and, along with it, of the whole crypto sector.
All this to say that we are not talking about some enthusiastic young beginner, but about a first-rank player in the world of traditional finance.
Let’s see what Fink says in his letter. Specifically, he devotes two pages (out of 12) to tokenization. That’s quite a lot. Below are the most significant passages.
Tokenization is democratization
What exactly is tokenization? It’s turning real-world assets—stocks, bonds, real estate—into digital tokens that can be traded online. Each token certifies ownership of a specific asset, much like a digital deed. Unlike traditional paper certificates, these tokens live securely on a blockchain, allowing instant buying, selling, and transferring without cumbersome paperwork or waiting periods.
Every stock, every bond, every fund—every asset—can be tokenized.
If they are, it will revolutionize investing. Markets wouldn’t need to close. Transactions that currently take days would clear in seconds. And billions of dollars currently immobilized by settlement delays could be reinvested immediately back into the economy, generating more growth.
Perhaps most importantly, tokenization makes investing much more democratic. It can democratize access.
Tokenization allows fractional ownership. This means that assets could be divided into infinitely small portions. This lowers one of the barriers to investing in valuable, previously inaccessible assets, such as private real estate and private equity.
It can democratize shareholder voting.
When you own a share, you have the right to vote on the company’s shareholder proposals. Tokenization makes this easier because your ownership and voting rights are tracked digitally, allowing you to vote simply and securely from anywhere.
It can democratize yield. Some investments produce much higher returns than others, but only big investors can get into them. The reasons? Friction—legal, operational, bureaucratic.
The full document is available here.
