BlackRock CEO Larry Fink sees tokenization making investing with your phone as easy as payments

For the second year in a row, BlackRock CEO Larry Fink is beating the drum on the tokenization of traditional investments.

While last year his comments highlighted the benefits of updating the old-school plumbing with a new, completely digital system powered by blockchain technology, this year, Fink focused on access and scale.

"Half the world’s population carries a digital wallet on their phone. Imagine if that same digital wallet could also let you invest in a broad mix of companies for the long term—as easily as sending a payment," Fink wrote in his annual letter. "Tokenization could help accelerate that future by updating the plumbing of the financial system—making investments easier to issue, easier to trade, and easier to access."

Tokenization turns traditional assets like stocks, bonds, and real estate into onchain digital tokens that can be more easily traded or even broken up. Fink mentioned last year how the tokenization could democratize investing by enabling fractional ownership of traditional assets.

The head of one of Wall Street's most powerful firms weighing in on tokenization comes at a time when traditional financial giants are demonstrating more interest than ever in utilizing blockchain technology to improve how investments and markets function. In parallel, U.S. lawmakers and regulators have also shown a willingness to not only explore, but also test tokenization.

Nasdaq and SEC embrace tokenization

Last week, the U.S. Securities and Exchange Commission said Nasdaq could launch its pilot program testing the trading of tokenized shares. Under Chairman Paul Atkins, the SEC has begun advancing crypto-related rulemaking, specifically looking at the possibility of allowing for onchain securities.

On Monday, Nasdaq and digital asset firm Talos said they have partnered with the aim of making tokenized collateral usable for institutional investors.

"This partnership builds on a series of strategic initiatives designed to converge on- and off-chain market ecosystems, while preserving the liquidity, transparency and integrity of regulated markets," Nasdaq Executive Vice President Roland Chai said in a statement.

Fink's evolving thoughts

When focusing more on the tech and less on the improved customer access last year, Fink compared tokenization to transitioning from using postal services to email for investing. He said markets wouldn't need to close, and transactions that can take days could clear in seconds.

BlackRock, which issues the largest spot bitcoin ETF, has proven to be one of the most proactive traditional asset managers in digital assets. But the firm is far from alone, as Wall Street firms increasingly position themselves to capture growing capital flows into crypto.

Goldman Sachs, the second-largest investment bank in the world, last year acknowledged the prevalence of cryptocurrencies in its annual shareholder letter for the first time ever.

"The growth of electronic trading and the introduction of new products and technologies, including trading and distributed ledger technologies, such as cryptocurrencies, and AI technologies, has increased competition," the firm said at the time.