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BlackRock is a leader in tokenizing real-world assets on blockchains
Black Rock (BLK) is leading the mass tokenization of real-world assets on blockchains, according to Michael Walsh, president of Zodia Markets Ireland.
“BlackRock has already gotten $16 billion into its spot bitcoin ETF and also has a dollar-denominated US Treasury fund, which has been tokenized with immediate inflows of nearly a billion dollars,” Walsh told Yahoo’s Future Focus Finance this week.
“The demand has been enormous, which gives them a leading position in the market.”
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BlackRock’s use of blockchain technology received a boost with the approval of their bitcoin spot exchange traded fund (ETF), called iShares Bitcoin Trust (IBIT), by the US Securities and Exchange Commission (SEC) in January this year.
BlackRock CEO Larry Fink said he sees this as a stepping stone towards tokenizing all real-world assets.
“I think ETFs are the first step in the technological revolution in financial markets. The second step will be the tokenization of each financial asset. And in my opinion, that’s where we believe it’s going to go, so we look at bitcoin, we look at ETFs the same way, these are technological changes that can allow us to move forward with tokenization,” Fink said CNBC News earlier this year.
Real-world assets tokenized on the Ethereum network
In March, BlackRock unveiled its first tokenized fund, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), issued on the Ethereum network.
Walsh said: “Ethereum is certainly trustworthy, it is present in smart contracts and various financial market applications, but, above all, it is a public blockchain.
“The key difference here is control, since on a public blockchain, like Ethereum, you and I are participants, we have control of our assets and our keys, and this means that only we can influence the transfer of the asset on the blockchain .”
Walsh then compared this to private blockchains, developed by some US banks. “They control everything, the rating, the movement and even the chain itself,” Walsh said.
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“Public blockchains, and especially Ethereum for the time being, will likely be dominant,” he added.
Tokenization of real-world assets and greater accessibility
Walsh highlighted the transformative potential of asset tokenization, highlighting its impact on financial accessibility. He suggested that tokenizing real-world assets, such as real estate deeds, could significantly simplify transactions.
“Imagine a world where your real estate deeds are tokenized. Instead of extensive legal processes, you could match fields and transfer ownership with the push of a button, reducing complexity for buyers and sellers,” he said.
He said tokenization could improve financial flexibility, allowing fractional ownership of assets that were previously inaccessible. “If assets such as US Treasuries or corporate stocks are tokenized, individuals can invest whatever fraction they choose, promoting liquidity and democratizing access to investments.”
With current restrictions, “many countries do not allow fractional shares, but tokenization could allow anyone to instantly buy and sell small portions of assets,” he said.
Tokenization democratizes access to financial products
According to Walsh, tokenization could democratize access to traditionally exclusive financial products such as private equity and litigation funding pools. “Tokenizing these pools means that anyone, not just the wealthy, can invest online in increments of up to $100,” she said.
This represents “the democratization of finance,” opening up new opportunities for retail investors, he said.
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Addressing security concerns, Walsh highlighted that blockchain-based transactions can be more traceable and secure than traditional cash transactions. “Unlike cash, which is untraceable, every transaction on a blockchain is recorded, improving transparency and traceability.”
However, Walsh recognized the need for regulatory frameworks that support the widespread adoption of asset tokenization. He noted that while cash remains the least regulated form of currency, tokenized assets can offer greater security and regulatory compliance. Looking ahead, Walsh predicted growing demand for asset tokenization.
He said: “As more and more people use distributed ledgers to store their assets, there will be a rush to digitize and tokenize assets for faster, cheaper and more fungible transactions.”
The benefits of tokenizing real-world assets
Tokenization involves converting rights to an asset, whether bonds or real estate, into a digital token on a blockchain network. It improves liquidity, transforming previously illiquid assets such as buildings or works of art into easily tradable tokens.
Traditionally, bonds have been the domain of large financial institutions, often out of reach of everyday investors. The traditional bond issuing process is expensive and involves intermediaries such as clearinghouses and underwriters, as well as significant legal fees. By tokenizing bonds, assets could become more available to retail investors, increasing their liquidity and accessibility.
Watch: Turning Real Assets into Tokens on Blockchain Has $15 Trillion Market Potential | Focus on the future
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