Why bitcoin-ETF approvals are a turning point for tokenization across the financial

  • A bitcoin ETF is a “turning point” for tokenization across the financial sector, Circle CEO Jeremy Allaire said.
  • BlackRock chief Larry Fink said the ETF was one of the “stepping stones” to widespread tokenization.
  • Those comments give the tokenization movement major credence, Allaire said.

The approval of a spot bitcoin exchange-traded fund could be a huge turning point for the tokenization of financial assets, according to Circle CEO Jeremy Allaire.

On a panel at the World Economic Forum in Davos moderated by Business Insider editor in chief Matt Turner on Wednesday, Allaire pointed to the Securities and Exchange Commission’s recent approval of a spot bitcoin ETF earlier this month. It was a move that had been eagerly anticipated by the crypto industry for years, which players say will broaden access to bitcoin for everyday investors. The regulator approved applications from 11 bitcoin ETF issuers.

Tokenization is the process of issuing a financial asset via digital representation on a blockchain. Crypto is one such example, but experts have talked about tokenizing all kinds of things, from real estate deeds and titles to intellectual property. 

“The tokenization of financial assets broadly, and other types of property, is going to change the way the financial industry works. It’s going to change access to finance and financial products,” Allaire said during the discussion. 

The CEO, who runs the issuer of the world’s second-largest stablecoin, is particularly bullish on the latest endorsement of tokenization from the top executive of one asset management titan. 

BlackRock chief Larry Fink said in an interview last week that the approval of the ETFs would be among the “stepping stones” towards tokenization.

Fink’s comments lend huge credence to the tokenization movement, Allaire said, given that BlackRock is the world’s largest asset manager. The firm has already had its bitcoin ETF application approved, and is waiting on approval for its spot ether ETF, which it filed an application for in November. 

“When Larry Fink gets on television the next day and says this is just the tipping point towards tokenization … I think it suggests confidence that tokenization is going to be coming on in a significant way, and that we’re going to see some of the very, very biggest asset issuers in the world issuing tokenized version of those assets this year,” Allaire said during the panel. 

The SEC has also gained a deeper understanding of blockchain technology in recent years, Allaire said, and that will likely help tokenization gain traction. 

“I do think it is not just about validation for bitcoin. I think it’s about the whole technology architecture, what it represents,” Allaire said. “We’re all sitting here because people are interested, right, and that this is here, and it’s not going away. And so I think it’s a significant shift for all those reasons.”

Some of crypto’s loudest critics remain skeptical even as bitcoin further enters the mainstream. A top Goldman Sachs Asset Management executive said that the SEC’s approval of a bitcoin ETF still doesn’t make the crypto a legitimate investment. Social Capital CEO Chamath Palihapitiya also dismissed the bitcoin ETF, calling it an “ETF to buy an imaginary coin made up of letters and numbers” in a post on X.

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