The Breakdown - The Tokenization Era Begins (says Fink)

Episode Date: October 16, 2025

BlackRock CEO Larry Fink says the tokenization of all assets has begun—from real estate to ETFs—and calls on Washington to accelerate digital asset regulation. We break down what this means for markets, crypto, and the future of finance, plus the DOJ’s record $14B Bitcoin seizure and Jerome Powell hinting that quantitative tightening may soon end. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Wednesday, October 15th, and today we are talking about tokenizing all the assets. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Well, friends, BlackRock CEO Larry Fink has declared that the tokenization era has begun. Speaking with CNBC on Tuesday, Fink said, I believe we're just at the beginning of the tokenization of all assets, from real estate to equities to bonds across the board.

He views the opportunity as largely about globalizing the U.S. market even further. Continuing, there's $4.1 trillion of money globally sitting in digital wallets. A lot of that money is outside the United States. If we could tokenize, say, an ETF, we could have investors who are just beginning to invest in markets through crypto, but now we could get them into the more traditional long-term products. We look at that as the next wave of opportunity for BlackRock over the next tens of years as we start moving away from traditional financial assets by repotting them in a digital manner. People could stay in that digital ecosystem.

Fink was on the show to discuss BlackRock hitting a record-breaking $13.5 trillion in assets under management last quarter, up from $11.4 trillion last year. He touted a broad range of growth drivers, but emphasized the success of BlackRock's crypto products. Their Bitcoin ETF crossed 100 billion in assets recently, with Fink remarking, two years ago, it was zero. On Tuesday night's earnings call, Fink had a few more tidbits about their tokenization strategy. He reinforced his view that tokenizing ETFs and meeting young investors where they are is the big opportunity. Fing said that the more people are introduced to traditional assets sooner, the more prepared people will be related to long-term savings opportunities in retirement.

He commented, we are in deep conversations. We're spending a great deal of time on trying to develop our own technology related to this. And I do believe we have some exciting announcements in the coming years on how we could play a larger role on this whole area of the tokenization and digitization of all assets. Interestingly, real estate was one of Fink's big examples of an asset class that's ripe for tokenization. He noted that real estate has layers and layers of intermediaries that are all charging fees. However, that's not what BlackRock is focused on. They want to tokenize their ETFs and they want to do it as soon as possible. The big blocker seems to be a lack of clear regulations. In no uncertain terms, Fink called for Washington to get a move on, stating,

the U.S. economy has been propelled in many parts by its leading market infrastructure. I believe the U.S. needs to accelerate regulatory clarity and investments in digital assets innovation. We need to be a leader in market infrastructure for much of the larger part of the world of digital assets. I'm John Mossad, the CEO of AI company Replit, noted how polished Fink's crypto talking points are becoming. He tweeted, whatever your crypto Web3 NFT monkey Digen trader friend is saying today, Larry Fink will be be saying in five years. It's very clear at this point that Fink has a vision of what the next decade of financial innovation should look like. The blockchain not Bitcoin days feels like a million

years in the past at this stage. There was an entire sub-discussion around which chain BlackRock's digital empire would be built on. Gwart noted the comment about them developing their own technology and quipped, I told you guys we should have never open source this stuff. Eleanor Territ, the host of crypto in America, wrote, the thing that stood out to me most from Larry Fink's interview this morning was when he said the next wave of opportunity for BlackRock is, quote, moving away from traditional financial assets and making them digital. That comment seems striking for two reasons. That Fink understood that BlackRock needs to reach young investors who these days are making their first trades on chain. He was also clear that a big part of the opportunity is wrapping

BlackRock's ETFs and making them more easily available globally. One of the big anxieties in the space has always been that large tradfi institutions will finally arrive and recognize the technology, but that they'll launch their own chains and usurp everything that's been built. referencing Fink's comments that BlackRock is working on their own tokenization technology, TXMC joked, it's pretty funny that people thought for years that TradFi would allow themselves to be front-run by a bunch of bagholders instead of just building their own stuff using ideas and features taken from crypto. And yet, it doesn't seem all that clear that that's the right conclusion to draw.

Fink's seem to understand that the big opportunity isn't about selling ETFs to boomers using private blockchains as slightly better infrastructure. Instead, it's about making that first contact with new customers, the ones that are currently buying crypto tokens. There's very little point to launching tokenized products into a walled garden, only accessible to existing customers. BlackRock has already demonstrated that they understand this concept with the launch of their on-chain money market fund.

They weren't the first to market with this kind of product, several other firms beat them by years. The difference was that those other firms used obscure chains with very little native crypto interest, like seller or avalanche. BlackRock launched where all of the volume already was, the Ethereum mainnet. Those other firms seem to be building a product to replace their infrastructure, and may have valued reduced cost over prospective audience. BlackRock set out to capture the crypto-native funds with a product that addressed their needs and rapidly grew into a category

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revenue seamlessly to funders. No middlemen, no bottlenecks, just sovereign, resilient infrastructure that works for people, communities, and investors alike. Learn more at althea.net and find them on crackin to join the future of infrastructure finance. The other big comment to underscore from Fink's earnings call was the need for the U.S. to, quote, accelerate regulatory clarity and investments in digital assets innovation. It's usually been correct to assume that what Larry Fink wants Larry Fink gets when it comes to Washington. And now it seems that Larry Fink wants tokenization rules out of the SEC and a market

structure bill out of Congress. T.D. Cowan's Washington analyst Jared Seaberg isn't so sure that will happen, even with Fink pushing the agenda. In this week's research note, he reported that negotiations around the market structure bill are not going well. The latest event was a proposal from a group of Democrat senators on the prevention of illicit finance in defy, a measure that crypto lobbyists said amounted to yet another backdoor defy ban, which is obviously a non-starter. The current reports from Washington is that Democrats won't commit to a date for a markup hearing in the Senate to debate amendments. Democratic Senator Ruben Gallego told Punchbowl news that his faction is committed to working with Republicans,

but that the bill text needs to be finalized behind closed doors before a hearing. hearing. He said through a spokesperson, Republicans asked for paper and substance and we delivered. Then they turned around and leaked our proposal and pretend to be surprised that our parties have policy differences. Their demand to set a markup date before Texas agreed to is like setting a wedding date before the first date. Presenting his team's view, Sieberg wrote, We do not see process objections as a real obstacle to a deal. To us, they indicate that senators are not interested in moving quickly. It is why we believe market structure may need to wait

until the midterm election. Now, of course, punting the bill that far into the future would put the crypto agenda at serious risk. That's more than a full year with no market structure bill, delaying all sorts of products that are contingent on legal clarity. In addition, it's entirely possible that Democrats will walk away from the midterms with control of the House, the Senate, or maybe both. That would make it much more likely that impossible compliance measures are slipped in, killing Defy and dashing all hopes of building out a tokenized market. Tempering his view, see Berg added, we're not suggesting that there is no path forward for action in the next 12 months. Our point is that there are more reasons for senators to delay action than to move

quickly. In other government news, the DOJ has announced the largest Bitcoin seizure in history. The Eastern District in New York said on Tuesday that they filed an indictment against former Chinese national Chen Xi. Chen is accused of operating a gigantic crypto scam network operating out of Southeast Asia, referred to as the Prince Group transnational criminal organization. 146 targets within Prince Group also had OFAC sanctions applied on Tuesday. The DOJ accused Xi of managing, quote, industrial-scale trafficking, torture, and extortion of enslaved workers that were forced to staff at least 10 scam compounds in Cambodia. If you've followed the reporting around pig-butchering scams in recent years, this is one of the largest networks involved

in that activity. Prosecutors have filed forfeiture orders against over 127,000 Bitcoin, worth somewhere north of $14 billion. That makes this not just the largest seizure of Bitcoin in history, but the largest criminal seizure of any kind ever. Most commentators mentally added this to the government's Bitcoin Strategic Reserve, ballooning its size by more than 60% to over $36 billion. That has, of course, technically how this works. At the moment, this is just an application for a forfeiture order. The government has the Bitcoin in their possession, but they won't have any right to the assets until the criminal trial is completed, and the forfeiture order is granted. Still, the seizure gave new context to debates around the Bitcoin Reserve.

Zach Shapiro, the head of policy at the Bitcoin Policy Institute, tweeted, for SBR skeptics, would you rather these coins hit the market all at once in a government auction, or are you glad that Treasury is now obligated by executive order to hold the 127,000 Bitcoin on our national balance sheet. While that's a reasonable point, Francis Puglio, the founder of Bull Bitcoin countered, Bitcoin's were stolen from victims worldwide conned by professional scammers. Miraculously, the coins are found and can now be returned to the victims, many of which I'm sure had lives ruined. And the first thing the SBR proponents think is, we can steal those Bitcoin too. Now this was one of the largest concerns when the SBR was announced, but the

idea was largely theoretical at the time. Now we have a very practical question of how the government should deal with 14 billion and stolen assets with likely hundreds of thousands of victims attached. Shapiro noted that there's a process for restitution claims from victims, which will surely be paid out. He added, The seizure of $15 billion in Bitcoin from a criminal enterprise built on human trafficking and financial fraud is exactly the kind of outcome the Strategic Bitcoin Reserve was designed to enable. This is what responsible Bitcoin policy looks like, defending victims, punishing abusers, and using justice to reinforce national resilience. Now, one quick macro story

that's getting a lot of attention on CT, Fed Chair Jerome Powell has signaled that the end of quantitative tightening is coming into view. In a Tuesday speech, Powell said, some signs have begun to emerge that liquidity conditions are gradually tightening, including a general firming of repo rates, along with more noticeable but temporary pressures on selected dates. Therefore, he said, it might become appropriate to end QT, adding, we may approach that point in the coming months, and we are closely monitoring a wide range of indicators. QT is the process of allowing government bonds to roll off the Fed's balance sheet, reducing its size. It began in June of 2022 when the Fed was fighting sky-high inflation. QT is generally seen

is the inverse of QE, which saw a ton of money printing over the COVID crisis. This is the moment that Arthur Hayes has been waiting for. He tweeted, there you have it, QT is over, back up the effing truck and buy everything. Now, the well-actually crowd was quick to point out that ending QT isn't really the same thing as starting QE, which sent Bitcoin to the moon in 2020. But if the current concern in the market is that liquidity is getting thin, then ending QT is an excellent place to start. Endgame macro wrote, this is Powell's version of we're close to breaking something. The Fed is still trying to sound in control, but this kind of comment signals they're already watching the plumbing strain. If these funding pressures keep building, it strengthens

the case for more rate cuts ahead. Powell may not admit it outright, but a little tightening in money markets as code for liquidity is getting dangerously scarce. While many are now then expecting QE to start showing up in short order, analysts Andrea Steno-Larsson urged everyone to slow their roles. He wrote, sorry to all the pumpers out there, even if QT ends in December, QE is not up next. There is a long way for the Fed to admit a larger balance sheet again, and it's not even necessary. Now, he's probably right there, save and accept for if liquidity issues show up in the bond market. The Fed doesn't exactly have a stellar reputation for getting out ahead of problems, so if they're thinking about ending QT, it may already be too late. We're not there yet, and a crisis in the financial

plumbing is never a good thing. Still, some can hear the money printers getting warmed up in the background. That's going to do for today's breakdown. Appreciate you listening, as always, and until next time, peace.