BlackRock CEO: Tokenization Is the 'Next Generation' for Markets

Ferdianto . December 02, 2022

Picture: CNBC

Techspace - The tokenization of securities, according to BlackRock CEO Larry Fink, "will be the next generation for markets and assets."

The process of creating a digital representation of an asset on a blockchain and certifying its ownership history is known in the field of blockchain as tokenization.

This method offers a different way to exchange assets like stocks, bonds, real estate, or even alternative assets like land, wine, or art, and it makes it possible for the transfers to be recorded on a public ledger.

Tokenization will offer "instantaneous settlement" and "lower fees," according to Fink, who spoke at a New York Times DealBook event. He went on to say that despite these benefits, the growth of this kind of technology wouldn't affect BlackRock's business strategy.

Along with discussing the potential of blockchain, the CEO also touched on a number of current economic concerns, such as the impact of the Russia-Ukraine conflict, China's evolving role, and the pressure from global inflation that has affected most developed nations this year.

BlackRock is certainly not the only company banking on tokenization as the direction of financial services, though.

Recent investments totaling $70 million have been made in Flowcarbon, a start-up that tokenizes carbon credits and is run by Adam Neumann, the former founder of WeWork. Notable investors include a16z, General Catalyst, and Samsung Venture Investment.

The goal of Flowcarbon is to use the first open protocol for tokenizing real, verified carbon credits from global projects to send billions of dollars toward initiatives that lower or remove carbon from the atmosphere.

In order to trade tokenized cash deposits in a Singapore-based trial using Onyx Digital Assets, a private blockchain developed by the bank, JPMorgan turned to Polygon in November. The banks conducted a test exchange of Japanese Yen for Singapore Dollars and tokenized Singapore government securities bonds for Japanese government securities bonds.

The bank has also emphasized the advantages of tokenization in some of its whitepapers, claiming that tokenization may one day make it possible to supply financial services "in a more open manner."

Despite having a positive outlook for tokenization, the CEO stated that he thinks the majority of businesses connected to cryptocurrencies "are not going to be around" in the future, however he did state that blockchain technology will be "extremely essential."

BlackRock Is Affected By The FTX Virus

Picture: Toko Crypto News

In response to the FTX crisis, which has dominated the cryptocurrency market for the past month, he claimed that the FTX's fatal fault was developing its own coin.

After reports of extensive cross-pollination between FTX and its sibling hedge fund Alameda Research surfaced at the beginning of this month, Binance sold off a sizable amount of its enormous stock of FTX's FTT token, which was one of the early catalysts for the FTX meltdown.

Picture: Blockchain Media

Changpeng "CZ" Zhao, the CEO of Binance, announced that his cryptocurrency exchange is selling its ownership of FTT, a competitor exchange FTX's native coin. Zhao mentioned "new developments that have come to light," but he made no further mentions in public or in response to Decrypt's request for more information.

The choice was made in response to weeks of criticism of Sam Bankman-Fried, the founder and CEO of FTX, for regulatory ideas he put up in a blog post that suggested limitations on DeFi. Since then, he has promised to change his regulatory stance.

As part of its withdrawal from an early equity investment in FTX that it had held since 2019, Binance received the monies in FTT last year. According to a statement from Zhao, FTX had purchased out Binance's ownership of the business using a $2.1 billion combination of FTT and BUSD, the stablecoin that is exclusive to Binance's exchange.

Although it was held in a subsidiary "fund of funds" and not in the "core part" of BlackRock's business, Fink made it clear that the value of his company's investment in the bankrupt exchange was $24 million.

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