⛓️ BlackRock: Tokenization to overtake SWIFT

BlackRock CEO Larry Fink and COO Rob Goldstein have delivered one of the starkest institutional warnings yet for central banks, saying tokenization has the potential to overtake SWIFT and bring about a complete refresh to the “plumbing” that underpins global finance.

As per them financial systems continues to run on slow, expensive infrastructure that’s susceptible to counterparty risk which was largely built decades ago. Tokenization, they argue, fixes that.

Why BlackRock thinks tokenization wins

Three pillars:

• Instant settlement

  Tokenized assets clear in milliseconds, not days. No counterparty exposure that current SWIFT-era systems can’t solve in full.

• Paper → Code

  Ownership on digital ledgers eliminates the need for manual reconciliation, couriers and batch processing. “The shift from telephone trades to tokenized rails is the largest since SWIFT was launched in 1977,” they added.

• Programmable trust

  The assets on blockchain are underpinned by embedded compliance, digital ID verification, and transparent auditability.

But the pair emphasize that the technology would need regulatory guardrails: obvious buyer protections, strong frameworks for reducing counterparty risk and digital-identity security standards on par with today’s banking systems.

Where tokenization comes from & how the public missed the big picture

BlackRock traces the origins of tokenization all the way to Satoshi Nakamoto’s 2009 creation of Bitcoin, which has used “the same original rails as BTC to provide real-world ownership proofs for any asset: treasuries, credit, real estate or private funds.”

But they observe that tokenization was lost in the “crypto boom and noise,” making it difficult for mainstream finance to grasp its broader significance.

Cross-border instant settlements, something SWIFT never even get solved

In contrast, today markets settle on wildly disparate timeframes (T+1 in the U.S., T+2 or more in other regions), which leaves traders open to failure, delay and margin uncertainty.

With tokenization, a global instant-settlement standard may be established that was not achievable within SWIFT’s message-based framework.

As Goldstein put it:

Regulatory hurdles ahead

BlackRock is being realistic: adoption won’t be linear. 

1. Regulatory bodies need to make a bridge from TradFi to tokenized markets rather than trying from scratch.

2. Assets should be classified based on their economic risk, not how they are represented. “A bond is a bond, even when it resides on a blockchain,” they said.

But the momentum is obvious: markets are being rewired in real time, and tokenization is powering forward as the next layer of infrastructure for global finance.

The cautionary note

The duo compared today’s moment to the early stock-ticker breakdowns during the 1929 crash, a sign that technology can outpace safeguards.

Tokenization, if not regulated in step, could repeat history.

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