The world’s largest asset manager has joined a growing chorus that hails the ‘tokenisation’ of traditional financial assets such as stocks and bonds.
BlackRock’s CEO Larry Fink, in his closely followed annual letter to investors, devoted a whole section to digital assets, noting that the space has “caught the headlines” over the past year thanks to the FTX collapse.
Left unsaid was that his firm had invested $24 million in the disgraced crypto exchange.
BlackRock’s stance comes as traditional financial institutions grab more market share from crypto-native firms whipsawed by regulatory setbacks, banking woes, and bankruptcies.
Meanwhile, finance firms are moving to issue traditional assets on-chain — Goldman Sachs, Societe Generale, and HSBC are among banks that have distributed more than $1.5 billion in digital, on-chain bonds in the past year, according to an S&P report.
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BlackRock, which manages $10 trillion in assets, announced a spot Bitcoin private trust last year, giving its clients direct exposure to Bitcoin. It also connected its Aladdin portfolio management software to crypto exchange Coinbase’s institutional offering, Coinbase Prime, to allow its investors access to crypto.
BlackRock’s moves into crypto are an about-face for Fink, who in 2017, called Bitcoin an “index of money-laundering”.
In his letter this week, Fink added that while the crypto industry is maturing, there are “clearly elevated risks” and a “need for regulation”.
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Fink said the “operational potential” of “underlying technologies” in the digital asset space could have “exciting applications” for the asset management industry.
“The tokenisation of asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors,” Fink said.
He added that BlackRock continues to explore the digital assets ecosystem “especially areas most relevant to our clients such as permissioned blockchains and tokenization of stocks and bonds.”