BlackRock's tokenization: A $68 trillion conspiracy

Author: Thejaswini M; Source: The Token Dispatch; Translation: BitpushNews

There's a moment in every revolution when you realize the rebels have won.

Not because they overthrew the old system, but because they themselves became the new system.

It's really strange to watch Larry Fink talk about tokenization with the enthusiasm of a 2017 ICO founder. This is the same guy who called Bitcoin a "money laundering index" in 2017.

Now, he's on CNBC saying that cryptocurrencies play a "crucial role" in diversified portfolios and that "all financial assets will be tokenized."

What has changed?

What has changed?

I don't think Fink experienced some kind of "Damascus moment" where he suddenly had an epiphany about Satoshi Nakamoto's white paper. I think he realized something more practical: **If you can't beat them, then take them in.** And if you're going to take them in, do it so thoroughly that ten years from now, people won't remember there was ever another option. This is the real core of BlackRock's tokenization plan. From a dystopian perspective, it's "brilliant." Okay, let me break it down, because BlackRock is very good at making this sound complex and visionary, when in reality it's quite straightforward. BlackRock manages $13.5 trillion in assets. They've identified that by 2040, the world will need approximately $68 trillion in infrastructure investment—new power grids, data centers, bridges, ports, and all those mundane but essential things that keep modern life running. Governments are out of money. Banks are constrained. So, where will the money come from? The ordinary person's savings, your money, my money. That $25 trillion lying in US bank accounts and money market funds earns almost no interest. The problem is, nobody wants to lock their savings in illiquid infrastructure projects for 30 years. You need to use your money. It might not be today, or tomorrow, but you need to know you can get it when you need it. That's exactly why your money is in a bank account in the first place. BlackRock's solution? Tokenization. They planned to put these infrastructure assets on the blockchain, break them down into tiny pieces, and make them tradable 24/7. Suddenly, that 30-year bridge project didn't seem so scary anymore because, hey, you can sell your tokens anytime. It became liquid. But… is it really? This is where my philosophical side starts to kick in. What exactly is liquidity? If I own a house, that's illiquid. I can't immediately turn it into cash. But if I own shares in a real estate investment trust that holds the house, that's liquid; I can sell those shares immediately. The house itself hasn't changed. They're still houses. But somehow, the financial instruments representing them became liquid. Tokenization does the same thing, just to a deeper level. BlackRock wants to take a data center (illiquid) and then create tradable tokens (liquid) representing ownership of that data center. You can trade these tokens on the blockchain 24/7. Problem solved, right? Not quite. Because the asset itself is still illiquid. That data center still needs 20 years to generate a return. That bridge still needs 30 years to recoup its costs. What tokenization does is distribute this illiquidity among many people, and everyone thinks they own liquidity because they can sell it to the next person. This isn't inherently a bad thing; financial markets have always done this. But let's be honest about what's happening. BlackRock didn't solve the liquidity problem. They solved the perception problem. They're making illiquid assets feel liquid, which is actually more powerful than making them truly liquid, because it means people will voluntarily put money into these investments. I can clearly see the "centralization within decentralization." BlackRock doesn't even hide it. They're explicitly building proprietary tokenized infrastructure. Not using Ethereum (too decentralized, too uncontrollable). Not using public blockchains for critical parts (although they'll use them when convenient, such as leveraging their BUIDL fund to access DeFi liquidity). They're joining Goldman Sachs and BNY Mellon in building private, permissioned blockchains. Let me repeat: **Private. Permission-required. Blockchain.** You know what that is? It's a database. A very fancy, expensive, cryptographically signed database, but it's still a database **controlled by BlackRock**. I'm not even angry about it. I actually admire it. It takes real guts to examine a technology designed to destroy you and then figure out how to use it to become indispensable. It's like how the record industry invented Napster. Let's break down what BlackRock is building, because the scope is truly astounding: Platform: They are creating the infrastructure upon which tokenized assets depend. Instead of using someone else's blockchain, they are building their own track and integrating it with their Aladdin risk management system. Compliance Layer: Their "sToken Framework" embeds KYC/AML directly into smart contracts. Transfer limits, ownership rights, jurisdictional restrictions—all are enforced by code. Their code. Custody: They hold the actual assets. You own the tokens representing those assets, but BlackRock owns the bridges, data centers, and real estate. Distribution: Through their ETF platform, their institutional relationships, and their partnerships with companies like Securitize. Pricing: Because they control the issuance and have access to data (thanks to the acquisition of Preqin), they effectively control price discovery for these tokenized assets. So… what's decentralized about this? Blockchain? Great. The technology is decentralized, but the power is completely centralized. Here's a detail I find interesting: Vanguard—whose executives have publicly stated that Bitcoin has "no intrinsic economic value"—is now the largest shareholder of MicroStrategy, a company whose sole purpose is to hold Bitcoin. How did they do that? Through index funds. Vanguard was required to buy anything included in the index, even if they thought it was a bad idea. Now, imagine BlackRock successfully tokenizing everything. Tokenized ETFs are added to the index. Index funds, which make up about 40% of the US stock market, are forced to buy them. Trillions of dollars of passive capital will automatically flow into BlackRock's ecosystem, whether it makes sense or not. That's the real genius. BlackRock isn't trying to convince everyone that tokenization is good. They're trying to make it inevitable. Once it's in the index, the money will flow in automatically. The $68 Trillion Trick Back to that infrastructure funding gap—$68 trillion. A huge number. Where will the money come from? BlackRock's pitch is essentially: "We will tokenize these infrastructure assets, making them accessible to ordinary investors through fragmented ownership, democratizing investments that were previously exclusive to a select few." That sounds great. But note what's happening: your liquid savings (in your bank account, available when needed) are now funding an illiquid infrastructure project (locked up for decades). Tokenization makes you feel secure by creating the illusion of liquidity. Your capital now becomes illiquid. You just don't feel it because you can trade your tokens. Again, this isn't necessarily evil. Infrastructure needs funding. Your savings need returns. But let's not pretend this is purely for innovation. It's about finding a socially acceptable way to move retail savings from safe, liquid instruments to risky, illiquid ones. Tokenization is just the "psychological wrapper" that makes this acceptable. So, what's really going on? I've been thinking about this late into the night, and here's what keeps popping into my head: BlackRock has a problem: a huge infrastructure funding gap, and the only realistic source of capital is retail savings, but people are unwilling to lock up their money for 30 years. They have a solution: tokenization creates the illusion of liquidity, making people more comfortable putting their savings into illiquid assets. They have an opportunity: by building proprietary infrastructure, they can control the entire ecosystem—issuance, compliance, custody, distribution, pricing—while using the language of "democratization" to make it sound like they're doing you a favor. But this could actually succeed. Not because it's the best solution, but because BlackRock is so large that they can make it the only solution. Once tokenized products are included in major indices, capital flows in automatically. Once capital flows in, the ecosystem is built. Once the ecosystem exists, alternatives become obsolete. I'm not saying tokenization itself is bad. I'm not even sure it is. Financial innovation often creates winners and losers, and losers are usually those who don't realize what's happening until it's too late. However, what bothers me is the language used here: "democratization"; "completing work started 400 years ago"; "bringing finance to the people." BlackRock isn't bringing finance to the people. They're bringing people's money to infrastructure projects that need funding. These are not the same thing. To me, true democratization is about autonomy. It's the difference between being invited to the table and actually having a voice at the table. When your retirement savings automatically flow into an index you never chose because of tokenized infrastructure, that's not participation. That's just a more complicated way of being told what to do with your money. Democracy requires the ability to say "no." BlackRock's system is built on the assumption that you won't say "no." Maybe this is fine. Maybe we really do need a more efficient way to finance infrastructure. Maybe tokenization is the real innovation. Maybe I'm just cynical because I've witnessed financial innovation consistently benefiting innovators more than participants. But when the world's largest asset management company tells me they're going to use their centralized, proprietary technology, which they control at every level, to "democratize" finance… man, I don't know, it doesn't sound like democracy to me. It sounds like something else. Something impressive, perhaps inevitable, even necessary. But not democracy. That's all there is to "BlackRock-style" tokenization. Examine everything, especially the details.