BlackRock Named Tokenization as the Main Driver of Change in Market Infrastructure

• Larry Fink and Rob Goldstein published an article on RWA.
• BlackRock’s management believes that this technology will change the current market infrastructure.
• But to do so, it needs regulatory support and appropriate consumer protections.

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BlackRock’s Chief Executive Officer (CEO) and Chief Operating Officer (COO) Larry Fink and Rob Goldstein published an article for The Economist on the prospects for tokenization. They see it as a revolutionary technology that could reshape market infrastructure.

Fink and Goldstein believe that the financial market is on the cusp of the next major transformation. Its main driving force, according to the article, is the tokenization of real-world assets (RWA).

BlackRock compared the technology to the SWIFT system, whose emergence in 1977 standardized the exchange of banking information and reduced transaction processing times.

That said, Fink and Goldstein separate tokenization from crypto assets in general. The latter “looked like speculation,” which initially prevented the TradFi sphere from assessing the full prospects of tokenization.

However, BlackRock believes that this technology will be the next “driver” of large-scale changes in market infrastructure, as it brings two important advantages:

• standardization of instant settlements in global markets.
• replacement of paper documentation with electronic documentation. This will enable, among other things, the replacement of large unquoted assets such as real estate with movable and accessible units.

According to the article, the first sign that the transformation has already begun is the growth of the RWA sector. The sector has grown 300% in the past 20 months, Fink and Goldstein emphasized.

However, this is a long and complex process, the authors noted, so tokenization will not replace the existing infrastructure overnight. A slow synergy scenario is more likely:

The key to further adoption, however, according to company executives, is the regulatory regime. Legislators should not invent new rules for tokenization, it will be more correct to update the existing base, the authors believe.

At the same time, it is no less important to timely update security measures, which will avoid possible “acute situations”.

Note, this is not the first time Fink has spoken about the prospects of tokenization. Previously, he has already stated that it is this direction will act as a key trend in the crypto sphere.

And BlackRock is at the forefront of this movement. According to rumors, the company plans to tokenize its funds based on real assets.