BlackRock CEO Annual Letter: Bitcoin May Challenge Dollar's Status, Tokenization Will Be the Future of Finance

Larry Fink, the CEO of BlackRock, recently released a 27-page annual letter to investors. In the letter, Fink unusually warned that if the U.S. fails to control its expanding debt and fiscal deficit, the dollar's status as the global reserve currency, which it has enjoyed for decades, could be replaced by emerging digital assets such as Bitcoin.

Bitcoin May Undermine the Global Reserve Status of the Dollar

Fink raised a thought-provoking question in the report: "Will Bitcoin undermine the dollar's status as the reserve currency?"

He pointed out that the United States has long benefited from the status of the dollar as the global reserve currency, but this status is not a permanent guarantee. Since the "National Debt Clock" in Times Square began tracking in 1989, the growth rate of U.S. debt has been three times that of GDP. This year, interest payments alone will exceed $952 billion, surpassing defense spending. By 2030, mandatory government spending and debt service will consume all federal revenue, resulting in a long-term deficit.

Fink also stated that he does not oppose the development of digital assets. He believes that decentralized finance is an outstanding innovation that makes the market faster, cheaper, and more transparent. However, it is this innovation that could also undermine the economic advantage of the United States—if investors begin to believe that Bitcoin is safer than the dollar.

Reflecting on performance, Fink mentioned that BlackRock's Bitcoin ETF launched in the U.S. has become the largest exchange-traded product debut in history, with assets under management surpassing $50 billion in less than a year. IBIT ranks third in asset attraction within the entire ETF industry, second only to the S&P 500 index fund. More than half of the demand comes from retail investors, with three-quarters coming from investors who had never held iShares products before.

Fink also pointed out that ETFs have not only achieved great success in the United States but are also becoming a key tool in driving the development of investment culture in Europe. Currently, only one-third of individual investors in Europe participate in capital market investments, far below the over 60% ratio in the United States. To raise this ratio, BlackRock is collaborating with several mature institutions and emerging platforms in Europe to jointly lower investment barriers and enhance local financial literacy.

Optimistic about RWA, believing that tokenization is the "highway" to the future of finance.

Fink believes that tokenization is becoming a key force in reshaping financial infrastructure. He points out that the current global flow of funds still relies on traditional "financial pipelines" such as the SWIFT system. This system was reasonable in the past, but today's efficiency is struggling to support the demands of a globalized and digital financial landscape.

In Fink's view, the emergence of tokenization will completely change this inefficient situation. He likens tokenization to email, while traditional systems are akin to postal services—assets can circulate directly and in real-time, bypassing all intermediaries.

Fink further depicts how tokenization profoundly changes the financial ecosystem. He believes that tokenization will achieve the "democratization" of investment, including access, shareholder voting, and the democratization of profits. This means that assets which originally had high barriers will be open to a broader group of investors, greatly reducing the participation threshold.

However, Fink also candidly pointed out that the widespread adoption of tokenization still faces key technological and regulatory challenges regarding identity verification. He mentioned that India has already made breakthroughs in this area, with over 90% of Indians able to securely complete transaction verification via smartphones.

Fink also reviewed the historical development of capital markets, pointing out their important role in promoting social prosperity and helping individuals accumulate wealth through investment. He emphasized the importance of expanding investment opportunities, especially allowing small and medium investors to participate in asset classes that were originally open only to the wealthiest individuals.

Despite acknowledging the widespread economic anxiety currently, Fink still tries to reassure investors, stating that such periods are not uncommon — just as in historical instances, relying on human resilience and the power of capital markets, the economy will eventually stabilize.

Overall, this annual letter to investors not only warns of the risks to the dollar's global reserve status but also serves as a prediction about the future of finance. From the tokenization that reconstructs capital markets to the breakthroughs needed in digital identity systems, Fink reveals the irrationalities of the existing system and points out the new directions that technological and institutional innovations may bring.