Original Author: Weilin, PANews
On March 31, Larry Fink, CEO of BlackRock, one of the world's largest asset management companies, released a 27-page annual letter to investors. In this letter, Fink unusually warned that if the United States cannot control its continuously expanding debt and fiscal deficit, the dollar's status as a "global reserve currency" that has been maintained for decades may ultimately give way to emerging digital assets like Bitcoin.
Bitcoin May Weaken the Dollar's Reserve Currency Status
On page 20 of the report, Fink raised a thought-provoking question: "Will Bitcoin weaken the dollar's reserve currency status?"
He stated that for decades, the United States has benefited from the dollar's status as a global reserve currency. However, this status is not guaranteed forever. Since the "National Debt Clock" began timing in 1989, US national debt has grown three times faster than GDP. This year, interest expenditure alone will exceed $952 billion, surpassing defense spending. By 2030, mandatory government spending and debt service will consume all federal revenue, creating a long-term deficit.
Percentage of US federal debt held by the public as a percentage of GDP
While warning about traditional financial risks, Fink also explicitly stated that he is not against the development of digital assets. Fink wrote: It needs to be said that I am obviously not against digital assets. Two things can be true simultaneously: decentralized finance is an extraordinary innovation. It makes markets faster, lower-cost, and more transparent. However, this innovation could also potentially undermine America's economic advantages—if investors begin to believe Bitcoin is safer than the dollar.
When reviewing performance, Fink noted that BlackRock's Bitcoin ETF in the United States became the largest exchange-traded product launch in history, with assets under management exceeding $50 billion in less than a year. IBIT is the third most asset-attractive product in the entire ETF industry, second only to the S&P 500 index fund. Over half of the demand comes from retail investors, with three-quarters from investors who had never previously held iShares products. This year, BlackRock has expanded its Bitcoin products to exchange-traded products (ETP) in Canada and Europe.
Fink further pointed out that ETFs have not only been hugely successful in the US but are also becoming a key tool in developing European investment culture. He stated that many first-time European investors entering the capital markets are taking their first steps through ETFs, especially iShares products. Currently, only one-third of European individual investors participate in capital market investments, a proportion far lower than the over 60% in the US. This not only causes them to miss growth opportunities provided by capital markets but also often sees their savings accounts eroded by inflation in a low-interest-rate environment.
To improve this proportion, BlackRock is collaborating with several mature institutions and emerging platforms in Europe, such as Monzo, N 26, Revolut, Scalable Capital, and Trade Republic, to lower investment thresholds and enhance local financial literacy.
Bullish on RWA, Directly Stating Tokenization is the "Highway" of Financial Future
Extending from ETFs to current hot crypto technology, Fink believes tokenization is becoming a key force in reshaping financial infrastructure.
Fink wrote that global fund circulation still relies on "financial pipes" established in an era when trading halls relied on shill calls and fax machines were considered revolutionary. Taking the Society for Worldwide Interbank Financial Telecommunication (SWIFT) as an example—supporting global transactions of trillions of dollars daily—its operation is more like a relay race: banks pass instructions sequentially, carefully checking details at each step. In the 1970s, with smaller market scales and lower transaction frequencies, this relay method was reasonable. But today, continuing to rely on SWIFT is as inefficient as sending an email via post office.
This system, while reasonable in the past, can no longer support the financial demands of today's globalization and digitization.
In Fink's view, the emergence of tokenization will completely transform this inefficiency. If SWIFT is postal service, tokenization is email itself—assets can circulate directly and in real-time, bypassing all intermediaries.
Fink further described how tokenization will profoundly change the financial ecosystem, undoubtedly implicitly bullish on the RWA market. "It is transforming real-world assets (such as stocks, bonds, real estate) into digitally tradable tokens. Each token represents your ownership of a specific asset, like a digital property deed. Unlike traditional paper certificates, these tokens safely exist on the blockchain, making buying and selling instant without cumbersome documents and waiting times. Every stock, every bond, every fund—every asset can be tokenized. Once achieved, it will revolutionize investment methods. Markets will no longer need closing, and transactions that previously took days can be settled in seconds. Billions of dollars currently frozen due to settlement delays can be immediately reinvested in the economy, driving more growth."
He stated that perhaps most importantly, tokenization will make investment more "democratized". Tokenization can democratize access. It allows asset fractional ownership—assets can be divided into countless small portions. This means high-threshold assets (like private real estate, private equity) will be open to a broader investor group, significantly lowering participation barriers.
Tokenization can also democratize shareholder voting. Owning stock means you have the right to vote on company shareholder proposals. Tokenization makes voting more convenient because your ownership and voting rights are digitally recorded, allowing you to participate safely and barrier-free from anywhere.
Tokenization can also democratize returns. Some investments have far higher returns, but often only large investors can participate. One reason is the existence of legal, operational, and bureaucratic "friction". Tokenization can remove these barriers, giving more people opportunities to enter high-return fields.
However, Fink also candidly pointed out that tokenization's popularization still faces a key technological and regulatory challenge. "One day in the future, I believe tokenized funds will become a daily allocation for investors like ETFs—but the premise is solving a key issue: identity verification."
He stated that financial transactions require strict identity authentication. Apple Pay and credit cards can complete billions of identity verifications daily without barriers. Platforms like NYSE and MarketAxess can do the same when trading securities. But tokenized assets will no longer pass through these traditional channels, so we need an entirely new digital identity verification system.
"It sounds complex, but the world's most populous country—India—has already achieved this goal. Today, over 90% of Indians can securely complete transaction verification via smartphone."
In this annual letter, Fink also reviewed the historical development of capital markets, highlighting their crucial role in driving social prosperity and helping individuals accumulate wealth through investment. He mentioned that further financial innovation is still needed to bridge the gap between public and private markets, emphasizing the importance of expanding investment opportunities, especially allowing small and medium investors to participate in asset classes previously only open to the wealthiest.
Although he acknowledges the current widespread economic anxiety, Fink still tries to reassure investors, stating that such periods are not new—just as in historical instances, relying on human resilience and the power of capital markets, the economy will ultimately restore stability.
Overall, Larry Fink's annual letter to investors warns of the risks to the global reserve status of the US dollar and serves as a prediction about the financial future. From tokenizing the reconstruction of capital markets to breaking through the bottlenecks of the required digital identity system, Fink reveals the irrationalities of the existing system and points out the potential new directions that technological and institutional innovations may bring.
