The CEO of the world’s largest asset manager, BlackRock, says Bitcoin and crypto-assets have the potential to increase financial inclusion and make it easier for investors to get ahead.
Larry Fink says in a new letter to investors that BlackRock continues to support the emerging industry and provide investors with a way to invest in the space.
“In the asset management industry, we believe the operational potential of some of the technologies behind digital assets could have exciting applications. In particular, the tokenization of asset classes offers the opportunity to enhance capital markets, shorten value chains, and improve costs and investor access.
Fink says the U.S. now lags significantly behind much of the world in financial innovation.
“In many emerging markets – such as India, Brazil and parts of Africa – we are witnessing dramatic advances in digital payments, reducing costs and promoting financial inclusion. In contrast, many developed markets, including the United States, are lagging behind in innovation, making the cost of payments much higher.”
BlackRock partnered with Coinbase last year to offer Bitcoin to institutional investors, which Fink says is likely just the beginning.
“At BlackRock, we continue to explore the digital asset ecosystem, particularly the areas most important to our clients, such as permissioned blockchains and tokenization of stocks and bonds. As the industry matures, these markets clearly have heightened risks and the need for regulation. BlackRock is committed to operational excellence, and we intend to apply the same standards and controls to digital assets as in our entire business.”
Fink also discusses the ongoing banking crisis that started in the United States and has now spread abroad.
He questions whether the financial dominoes will begin to fall as regulators step in to prop up the system.
“This past week we saw the largest bank failure in over 15 years when federal regulators seized Silicon Valley Bank. This is a classic asset-liability mismatch. Two smaller banks also failed in the past week.
It is too early to know how extensive the damage is. So far, regulation has reacted quickly, and decisive actions have helped to prevent the risks of contagion. But the market is still on top. Is the asset-liability mismatch another domino to fall? Past foreclosure cycles have often resulted in spectacular financial conflagrations—whether it was the savings and loan crisis of the 1980s and early 1990s or the bankruptcy of Orange County, California in 1994…
As banks potentially tighten their lending, or as their customers wake up to these asset-liability mismatches, I expect they will likely increasingly turn to the capital markets for funding. And I think a lot of corporate treasurers these days are thinking about swiping bank deposits in the evenings to reduce even overnight counterparty risk.”
You can read the full letter to investors here.
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Disclaimer: The opinions expressed in The Daily Hodl are not investment advice. Investors should do due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that transfers and trades are at your own risk, and any losses are your responsibility. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, and The Daily Hodl is not an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured image: Shutterstock/Larich