BlackRock, the world’s largest asset management company, is exploring the tokenization of stocks, according to an annual letter to investors by its CEO, Larry Fink.

In the letter published on March 17, 2023, Mr. Fink highlighted that while Bitcoin has been in the headlines, many emerging markets are witnessing dramatic advances in digital payments that are bringing down costs and advancing financial inclusion.

He also noted that developed markets like the United States are lagging behind in innovation, resulting in higher costs of payments.

Furthermore, Mr. Fink suggested that the tokenization of asset classes could drive efficiencies in capital markets, shorten value chains, and improve cost and access for investors.

BlackRock is exploring the digital assets ecosystem, especially areas most relevant to its clients, such as permissioned blockchains and tokenization of stocks and bonds.

The CEO acknowledged the elevated risks and the need for regulation in the cryptocurrency market but expressed optimism about the potential of digital assets.

BlackRock sees the industry as maturing and believes that the operational potential of the underlying technologies will continue to offer exciting opportunities.