Inside BlackRock’s Crypto Strategy: Tokenization, Stablecoins & The Next Trillion | Robbie Mitchnick, Head of Digital Assets

Summary

Podcast Summary: Bankless — "Inside BlackRock’s Crypto Strategy: Tokenization, Stablecoins & The Next Trillion"

Guest: Robbie Mitchnick, Head of Digital Assets, BlackRock
Host: Bankless
Date: November 10, 2025

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Episode Overview

This episode offers a deep dive into BlackRock's view and involvement in the crypto and digital assets space. Robbie Mitchnick, BlackRock’s Head of Digital Assets, discusses institutional participation in crypto, the evolving cycles of the market, the “tokenization of everything,” and the pivotal role of stablecoins. The conversation outlines the progress in ETF adoption, tokenization of financial assets, regulatory clarity, and what will drive crypto for the next cycle.

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Key Discussion Points & Insights

1. Are Crypto Market Cycles Still Relevant?

• Bear Trap or Bear Market?
  • Robbie notes that crypto has survived multiple bear markets and severe corrections. The dynamics are changing due to institutional participation.

    “If we counted the number of times that people have declared it over over the sixteen years then that'd be a pretty high number. [...] This is the fifth cycle we've seen in bitcoin and crypto's history...” — Robbie (01:01–01:08)

• The Diminished Role of the Bitcoin Halving:
  • Institutional inflows via ETFs now dwarf any impact from scheduled halvings.

    “The bitcoin halving at this point is almost totally irrelevant. [...] ETF's are accumulating inflows [...] many multiples larger than any change in supply created by a bitcoin halving event...” — Robbie (03:36–03:52)

• Institutional ‘Ballast’ and New Dynamics:
  • Large investors stabilize markets, and their behavior (waiting for dips to buy) marks a shift from previous cycles dominated by retail psychology.
  • Recent major sell-offs, like the 21 billion liquidation event (Oct 10), were absorbed with little ETF outflow, highlighting institutional resilience.

    “What was the impact on ETF outflows? Tiny. [...] There wasn't any relevant news like there was, just kind of noise.” — Robbie (04:39–04:53)

2. Crypto’s Narrative: Risk-On, Hedge, or Digital Gold?

• Behavior in Market Downturns:
  • Institutions are sometimes confused by crypto's correlation with equities, but the long-term thesis remains its role as a global, scarce, uncorrelated asset.

    “Bitcoin is not a risk on asset. It's really more like an uncorrelated hedge type asset, more like a digital gold.” — Host, referencing Robbie’s past comments (13:30)

• Gold vs. Bitcoin in 2025:
  • Gold’s recent outperformance is described as “catch-up” after Bitcoin’s late 2024 rally. Bitcoin’s momentum was derailed by flash crashes, not fundamentals.

    “Bitcoin actually had a massive rally to end twenty twenty four [...] gold didn't have that same reaction that it’s now obviously had a tremendous year since...” — Robbie (14:41–14:50)

• Long-Term Holders, ETFs, and Bitcoin’s ‘IPO Moment’:
  • Some original Bitcoin whales are cashing out at $100k, but Robbie finds this rational and distinct from an IPO analogy.

    “One hundred thousand was a target that I think a lot of very early investors maybe had for whatever reason... At some point you do have to take some chips off the table.” — Robbie (17:37–17:59)

3. Institutional Participation & Remaining Catalysts

• Which Institutions Own Crypto?
  • All major archetypes (family offices, asset managers, sovereign wealth, etc.) have some exposure, but adoption is still limited and early-stage.

    “You have some adopters in every one of those archetypes but not the majority, not even close.” — Robbie (19:41–19:47)

• Allocation Sizes & Trends:
  • Allocations are typically in the 1–3% range of institutional portfolios; however, the share of institutional investors is steadily rising.

    “The allocation levels that you're seeing from those who have is typically in kind of a one to three percent range.” — Robbie (24:28)

• What Holds Institutions Back? Correlation:
  • Their key question: Does Bitcoin behave like a risk-on asset or like digital gold? Persistent low correlation to equities would unlock large-scale adoption.

    “It's all about correlation. [...] CIO said literally that's the one metric I'm looking at: correlation.” — Robbie (20:12–20:36)

• Central Banks as Future Buyers?
  • Central banks’ interest in Bitcoin is distant and not critical to the thesis; focus remains on other large institutions.

    “I think those other institutional categories that I mentioned are probably far more likely to see meaningful adoption [...] than are central banks.” — Robbie (26:32–26:45)

4. BlackRock’s ETF & Tokenization Strategy

• ETF Performance and Adoption:

  • BlackRock’s iBIT (Bitcoin ETF) is the fastest-growing ETF post-launch ever:

    “iBIT today has been the fastest growing ETF post launch in history [...] four x faster than the prior record.” — Robbie (28:02)

  • ETHA (Ethereum ETF) picked up pace over summer, driven by improved sentiment, stablecoin narrative, and optimism around tokenization.

    “Sentiment in ether had gotten overly negative this winter [...] and was kind of all doom and gloom. [...] There was some element of a relief rally.” — Robbie (29:57–30:04)

• What is Tokenization? BlackRock’s Approach:

  • Tokenization means putting traditional assets (money market funds, bonds, stocks, real estate) on blockchain rails for real-time settlement and programmable finance.

    “We really started with BITLE as our first public blockchain tokenized fund [...] almost three billion in assets.” — Robbie (32:09–32:20)

  • The most “material new value or utility for investors” so far has come from tokenized money market funds — breaking old tradeoffs between liquidity and yield.

    “Tokenizing them has broken the paradigm that previously existed that forced you to choose between capturing full yield on your US dollar savings and having full liquidity.” — Robbie (32:36)

• What’s Next?

  • The roadmap: focus on high-utility assets first (money market funds, stablecoins), then expand to other classes like stocks, real estate, and private markets as infrastructure and regulation mature.

5. Regulatory Clarity, Custody, and Marketplaces

• What Was Missing for Tokenization to Scale? - Institutional custodians: Major traditional custodians are building tokenized asset capabilities. - Secondary marketplaces: Progress in DeFi, less in traditional finance exchanges. - Regulatory clarity: SEC has been supportive, but nuanced, complex work remains.

  “There's a really complex challenge before us as an industry [...] to figure out how to make the ultra rules and what novel rules and exceptions come into play that harness the innovative potential and opportunities from this technology.” — Robbie (38:23–38:42)

• Progress and Outlook:

  • Huge progress in custody; process ongoing in regulation; secondary marketplaces lag but expected to follow as clarity increases.

6. The Bull and Bear Case for Tokenization

• Bull Case:
  • Over 5–10 years, Robbie foresees the “tokenization of everything”—a rapid S-curve uptick once infrastructure matures.

    “Once you have a bunch of asset classes that hit that inflection point, it becomes a lot easier to bring along other asset classes in behind it.” — Robbie (45:48)

• Bear Case:
  • Only stablecoins and tokenized money market funds gain traction—still a huge win due to their utility.

    “The bear case is that only stablecoins work. It's hard to imagine a world where not even stablecoins have significant adoption [...] that horse has left the barn.” — Robbie (48:39–49:07)

• Stablecoin Future:
  • No expectation of thousands of stablecoins; network effects mean a few winners will dominate (likely USDC and USDT).

    “Network effects are really powerful in the stablecoin space [...] I certainly wouldn't expect we'll have a thousand different stablecoins.” — Robbie (52:33–52:51)

7. Tokenization and Traditional Finance

• Impact on Banks:
  • Tokenized yield funds will allow users to earn yield and instantly convert to stablecoins for payments, reducing focus on interest payments on stablecoins themselves and diminishing banking resistance.

    “Tokenized yield funds become the natural vehicle through which users hold US dollars on a sort of going concern basis and capture that full interest.” — Robbie (51:09–51:27)

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Notable Quotes & Memorable Moments

• On the cycles ending:

  “There were some big events that actually precipitated those endings… We haven’t seen anything like that here.” — Robbie (06:17)

• On institutions’ key metric:

  “That’s the one metric I’m looking at: correlation. [...] If it actually is uncorrelated digital gold like instrument [...] it’s a slam dunk.” — Robbie (20:28–20:39)

• On tokenization’s test:

  “Now it’s finally the environment where that regulatory support exists and so it’s time to prove it.” — Robbie (54:17)

• On investor advice:

  “There’s a reason bitcoin is still roughly sixty five percent of the market cap of the space because it has very clear product market fit and investor narrative...” — Robbie (56:12)

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Timestamps for Key Segments

• [00:00] — Institutional investors in crypto: Who's here, who's not.
• [03:25] — Why the classic Bitcoin halving cycle may be over.
• [10:54] — How big sell-offs affect institutional interest.
• [13:30] — Bitcoin as digital gold: Is it still uncorrelated?
• [22:26] — The importance of correlation in institutional adoption.
• [24:27] — Institutional allocation sizes (1–3%).
• [27:27] — Performance and impact of IBIT and ETHA ETFs.
• [32:08] — BlackRock’s tokenization roadmap and focus on utility.
• [36:43] — Progress on custody, marketplaces, and regulatory clarity.
• [44:52] — Bull (tokenize everything) and bear (only stablecoins) cases for tokenization.
• [53:28] — What success looks like for crypto and BlackRock by late 2026.
• [56:10] — Robbie’s advice for institutions during volatility.

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Conclusion: The “Show Me” Era

BlackRock's digital assets strategy is at the forefront of institutionalization in crypto. The next phase, as Robbie Mitchnick frames it, is about showing real, large-scale adoption and tangible use cases—especially as regulatory clarity increases. Tokenization is both a promise and a test: can blockchain reshape the fundamental plumbing of traditional finance? For now, stablecoins and money market funds lead, and BlackRock is betting many more asset classes will follow.

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Disclaimer:
As always, none of the discussion is financial advice. Crypto assets remain volatile and risky, and sensible portfolio management and skepticism are advised.

Transcript

[A]

If you think about the big categories of institutional investors you've got family offices asset managers sovereign wealth funds university endowments foundations corporate treasurers insurers right pension funds you have some adopters in every one of those archetypes but not the majority not even close.

[B]

Robby you run crypto at blackrock so i feel like you know more about institutions and crypto than just about anyone we've talked to on bankless so i want to start with a question that's on everyone's mind particularly on a day like today so we are recording this a day that's a little bit red in the crypto markets sure is they seem to be coughing up a little bit so prices is it over or is this just a bear trap.

[A]

Gosh well if we counted the number of times that people have declared it over over the sixteen years then that'd be a pretty high number so no i certainly don't think it is i mean they put it in perspective right this is the fifth cycle we've seen in bitcoin and crypto's history right and through each of those five cycles or at least each of the four preceding cycles you had these extraordinary bull markets right and at the end of each a pretty severe correction but through each successive cycle the level that bitcoin reached was massively higher than the prior cycle right and collectively across these five cycles bitcoin's gone up by six orders of magnitude right one million x one hundred million percent since when it first started trading on exchanges in in twenty ten so this is obviously nothing new to crypto i actually think you know if you'd polled people on this day a year ago and they said you know bitcoin would be at over a hundred k and crypto market cap would be three and a half trillion most people would have said wow that's that's an amazing outcome so i think there's a tendency to maybe overreact in both directions in fact more than maybe there's definitely a tendency to overreact in both directions in crypto markets and i think some of the negative sentiment that we're seeing right now is consistent with.

[B]

That trend let's talk about those four previous cycles and maybe now this this fifth one so i guess it's not over for crypto i think most bankless listeners would would wholeheartedly agree i think they're wondering though if this cycle has is over and so previously crypto cycles have been boom bust in these four year increments some people talk about that following kind of the global liquidity trajectory others you know that it follows the the happening but we've seen this history play out before and this would be the fourth year of a new cycle so it's about time that bitcoin would sort of end one cycle go down correct for some period of time we might have twelve months of quote unquote bear market before things correct do you think that's what's about to play out like right now do you think it's the end of the a cycle or do you think this one is different this one extends into twenty twenty six or maybe the notion of cycles is less irrelevant now that we have so much institutional capital at play well i.

[A]

Think there's a bunch of reasons why the cycles are probably less relevant on that sort of predetermined schedule that it seems to have followed in the past right the first is a lot of people believe the cycle is tied to bitcoin halving right the bitcoin halving at this point is almost totally irrelevant right when etf's are accumulating inflows the magnitude of those inflows is many many multiples larger than any change in supply created by a bitcoin halving event from here until the end of bitcoin right till the end of the bitcoin reward function in twenty one forty and you also have i think as you alluded to more institutional maturity in this market and certainly more participation than you had before i mean i was with a very large institutional investor recently and they've accumulated a decent sized position in bitcoin and they said we want to buy more but we want it to go down twenty five percent first and that's a dangerous game you know that one is a dangerous game it's an interesting strategy but it's also fascinating because when's the last time you heard or saw that behavior from most people in crypto markets right most people in crypto markets they they tend to to get more enthusiastic the more it's gone up and they tend to sell as things go down and that creates reflexivity in both directions so now that you have this institutional participation i think you have more ballast in the market look at october tenth for example the twenty one billion in liquidations that we saw in crypto that day we could talk more about you know what's going on there because i do think it's a really important event what was the impact on etf outflows tiny right a couple hundred million twenty one billion being liquidated over there and the etf investor base kind of went huh nothing really to see here there wasn't any relevant news like there was just kind of noise and so i think that you will see probably a muting of some of those maybe cyclical effects that have happened and the last piece is before anyone starts to declare a cycle over if you look back historically through the previous four there were some big events that actually precipitated those endings right and we haven't seen anything like that here in the second cycle it was the mount gox implosion in the third cycle that rally had just gone totally parabolic insane where bitcoin was at two thousand in september of twenty seventeen and it was at twenty thousand in december of twenty seventeen so that was crazy and obviously unsustainable and then in the fourth cycle you had just an enormous pileup of really negative events fueled by excessive risk taking bad ideas outrageous leverage et cetera that all sort of coincided whether we're talking about you know terra luna or we're talking about you know eventually ftx which was kind of the final blow to end that that fourth cycle but that hasn't really happened yet now what we have seen happen that i think is cause for some concern obviously there was a lot of exuberance around digital asset treasuries some of that may have gotten ahead of itself right and so that so far though seems to be fairly orderly in the way that that amplitude has has come down and sort of the you just don't see a lot of new financings being announced anymore in that category the way you did sort of every single day this summer you also see i think a worrying amount of leverage in particularly levered perps and so that really was the story of the october tenth flash crash i mean there wasn't a whole lot of news worthy of a negative market reaction but you had so much leverage in the system and obviously you had some collateral pricing dynamics that exacerbated the impact of that but to see you know how severe that reaction was it's a reminder of just how much leverage there is on a lot of those platforms and that also you know we talked about that in the past it's really confusing to sort of the marginal institutional adopter the marginal financial advisor adopter when they think of something like bitcoin as you know this digital gold diversifier potential hedge it's exists outside of any one country's economic fiscal political geopolitical matters et cetera and then there's these periods where bitcoin and crypto trade like they're levered nasdaq on sort of economic and macro news and that's puzzling to people and sometimes people try to slap this risk on framing on it to sort of reverse rationalize what's happened i don't think that makes a lot of sense the drivers of crypto and certainly bitcoin are very distinct from you know your traditional equities or other you know traditional portfolio assets but when you have these levered futures where trading does behave that way and sort of amplifies these sell offs alongside equities even if they don't make a lot of fundamental sense that's confusing to the incremental.

[C]

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[B]

The show notes it's confusing does it scare them away so when you have a twenty to thirty billion dollars flash crash in the month of october as we had in crypto the biggest liquidation event that we've ever seen does that scare institutional investors away from this asset.

[A]

Class it certainly does to some extent i would say not all sell offs are created equal and what's behind it has a larger effect necessarily than what the amplitude of the drawdown is and so luckily for bitcoin and crypto to some extent in that event was that the alleged explanation the alleged trigger was so de minimis in terms of its plausibility as a negative event for crypto that it didn't really draw folks attention all that much other than wow that was sort of a big sudden drop which is different than say you know back in in april where you had you know tariff dynamics and equities obviously were were were down in the short term on that when bitcoin also was down at the start you had a lot of questions because people said wait like fundamentally this is digital gold this is supposed to be the diversifier and a hedgehog and why is it reacting to tariff news and sort of economic dynamics and that didn't make sense to people and it did temporarily give them pause now to bitcoin's credit as we've seen in many other instances where this sort of behavior happened by even just a couple weeks later bitcoin was off to the races because the sort of long term fundamental buyer base had said the more economic and geopolitical uncertainty there may be actually the more advantageous that is for bitcoin as this global scarce decentralized asset that exists outside of all these economic and country specific systems robby.

[B]

I remember you beating this drum when you came on it was just over a year ago i believe and you talked about bitcoin is not a risk on asset it's really more like an uncorrelated hedge type asset more like a digital gold now when you see the performance of actual physical gold this year and institutional investors see that which is you know they've been calling this a debasement trade i think gold is up on the year about fifty percent times it was as high as sixty percent has certainly outperformed bitcoin at least from a year to date perspective and so people are looking at that and saying well if physical gold is overperforming this digital gold then maybe bitcoin is not a uncorrelated hedge asset maybe we needed gold all along now some people in crypto are saying well wait just wait for the catch up trade right bitcoin is going to catch gold price what's your take on this and what do you tell institutional investors who are asking why gold just keeps outperforming bitcoin on.

[A]

The year well actually some of this is gold's catch up trade right because bitcoin actually had a massive rally to end twenty twenty four right going from high sixties to over one hundred k and so that actually sort of artificially maybe inflated the twenty twenty five starting benchmark a bit and gold didn't have that same reaction that it's now obviously had a tremendous year since particularly the last month or two for a lot of that debasement trade rally that gold has been enjoying bitcoin was right alongside it right that is a big part of what buoyed bitcoin to that one hundred twenty six k new all time high it was very closely tied obviously to the government shutdown developments and sort of continued fears over us fiscal and political dynamics in the long term and that probably would have continued frankly if not for the october tenth flash crash which had nothing to do with anything fundamentally for bitcoin but it totally derailed the momentum that had happened and created this sort of new hangover overall of crypto and certainly undermined and sort of in an unhelpful way for bitcoin changed the channel from the debasement trade which it was enjoying alongside gold to volatility and risk on type behavior justified or.

[B]

Otherwise there was an article this week that made the rounds at least among crypto investors it was an article by an investor analyst jordy besir and he was looking at the numbers and trying to explain the reason why bitcoin has been somewhat stagnant i guess on the year and again year to date right i'm talking about and one of his explanations for that was just looking at long term holders the original bitcoin whales and he had some graphs where you can kind of see long term holder selling in these graphs he brought up the the point that you know galaxy digital they did a nine billion trade with some unknown crypto whale and the point i think the article was entitled the ipo moment for bitcoin he was drawing a an analog between you know public companies going ipo and the early believers you know the early vc's the early investors the early employees kind of selling you saying the original cipher punks and libertarians behind bitcoin this is kind of their moment to sell as their capital has appreciated into the millions and the hundreds of millions and the billions now we have etf's and so they're taking opportunity to sell so it's bitcoin's ipo moment as you know one class of investors maybe the early pioneers early adopters shifts to entrepreneurs or sorry to institutional capital and he's saying that's the reason for some of the stagnation do you buy that argument do you see any of that in the data a.

[A]

Little bit not not entirely i think that to draw a parallel to ipos i think maybe a little bit of a of a stretch here i think more of what's going on is one hundred thousand was a target that i think a lot of very early investors maybe had for whatever reason right it's a nice round number but people who came in and their cost base was one hundred or five hundred dollars and one hundred thousand seemed like a nice round number to take some chips off the table and frankly i don't blame them and these are people who deserve a lot of credit for having the conviction over many years and through many volatile cycles to continue holding and holding and i think it's pragmatic the way i think about it i certainly don't expect to ever have that kind of wealth in my life but if you think about it if you have a billion dollars how much better is your life if your billion dollars becomes two billion dollars i think what like maybe two percent better like not a lot better right so at some point you do have to take some chips off the table and say maybe it's not prudent to have ninety eight percent of my net worth in bitcoin as much as i believe in it and so i think that's probably the primary explanation of what's going on i think it's.

[B]

Entirely reasonable we are twenty one months from the launch of the blackrock bitcoin etf's and all bitcoin etf's so been in the market for a while almost two years i think one of the questions we have this cycle however long the cycle continues or does not continue is what's the catalyst who are the new buyers of crypto assets one thing we've been waiting for for over a decade in crypto is for the institutions to come now we're talking to blackrock now we have etf's that have been purchased i assume by some of the institutions so are the institutions here yet how much crypto do they actually own like what's the next net new buyer of the bitcoin etf's if the institutions are already here do you see any.

[A]

Catalysts well the institutions are here at the very leading edge right so if you think about the big categories of institutional investors you've got family offices asset managers sovereign wealth funds university endowments foundations corporate treasurers insurers right pension funds you have some adopters in every one of those archetypes but not the majority not.

[B]

Even close did you also mention sovereign wealth do we have sovereign wealth in that category we do we do have some adopters in sovereign wealth that's right.

[A]

Wow yep and so you have early adopters but they're very much the minority still and i'll tell you what is the critical thing that either unlocks or doesn't their adoption it's all about correlation and that's why you know we've talked about this in the past that i was on i talk about this a lot i'm sure it's very annoying to some people how often i harp on it but it's because it is that important in terms of the way people look at this from an institutional allocation perspective i was with a client recently sizable pension fund allocator and the cio said literally that's the one metric i'm looking at correlation that's right because if it actually is uncorrelated digital gold like instrument that is a diversifier and a hedge it's a slam dunk to put a couple percentage of portfolio allocation in it from their perspective but if it's more like levered nasdaq it's whatever this risk on narrative sometimes proclaims it to be even though you know that's i think counterproductive and also not really supported by fundamentals then it's a totally different bar because then an investor has to say what is the sort of broad investment thesis on the technology and the utility and the adoption curve its future money and all these sorts of dynamics which lots of people do that analysis and they come out and say okay bitcoin's interesting eth is interesting you know these other crypto assets are interesting like you could get there but it's a very different threshold and you're competing against every other interesting technology play that exists in the world today and there are lots and that's a very different question than is this digital gold and if so well then you know it makes sense as a hedge against monetary debasement inflation fiscal challenges geopolitical uncertainty to have some in my portfolio so that's what almost all these guys are watching so.

[B]

Ideally for them to buy more and buy in size you'd want to see bitcoin and other crypto assets presumably but in particular bitcoin correlated with gold rather than the nasdaq and risk on assets.

[A]

That'S right so for bitcoin that's the thesis right for the vast majority of new adopters say is this idea of it as digital gold right a global scarce emerging monetary alternative for the rest of crypto it's about blockchain adoption digital asset and blockchain adoption right and so the proof point for bitcoin is how does it consistently behave against that and people have to look beyond these short term moves which are largely driven by levered perpetual futures kind of volatility and more about you know medium and longer term how does it track against that dynamic and when you look at it at a more zoomed out lens it's actually been very compelling even with these short term gyrations the proof point for eth and for the rest of crypto is show me the use cases show me the adoption show me how the technology's actually being deployed and transforming different parts of our economy and financial system.

[B]

And so back to are the institutions here and in what size so you seem to indicate that there are pioneers in each of the major categories that are here are they in size yet like if we were to try to say i don't know if it's a baseball game what inning are we in as far as institution cap institutional capital that could be allocated to crypto or what percentage of you know one hundred percent are we kind of in i think what we don't really have what you know crypto natives many of the bankless listeners probably don't have a lens for is how much institutional capital we actually have like how far we know central banks like don't really own very much crypto but how about these large institutions have they already bought in or are they just starting well i would.

[A]

Say that the allocation levels that you're seeing from those who have is typically in kind of a one to three percent range so that's that's the most common range that we're seeing from those who have and that's actually you know pretty significant and the way that's showing up the first quarter after we launched the bitcoin etf's ibit for instance was over eighty percent direct retail investors every quarter thereafter that number has come down to the point where today it's close to fifty percent and so the other fifty is the growth in wealth advisory and institutional and so the trend is very clear those latter buckets which are of course a larger asset base ultimately than retail investors in the direct channel are today is moving more slowly but they are moving and they're paying attention to a lot of these subtle dynamics around adoption around long term tailwinds around political and regulatory environment and yes around some of the price behavior and how that fits or doesn't with certain investor.

[B]

Narratives so we're still early in the journey it sounds like even with respect to institutions how about central banks i mean part of the big driver of gold at least lately has been talk of central banks increasing their gold allocation china russia other central banks we haven't seen quite that movement or anything close to that with respect to bitcoin but the whole bitcoin crypto narrative has been in the fullness of time it starts with retail and then it gets to institutions larger and larger institutions the biggest institution of all is a central bank treasury and that's where gold has found itself how long will it take bitcoin to find itself there what's the path.

[A]

Well i don't think that that should be a core part of anyone's investment thesis remember that central banks absent a little uptick here the historical trajectory is they've moved away from gold right that used to be the fundamental basis of central bank reserves and as we moved off the gold standard around the world the migration has been in the other direction and obviously there's a little bit of a of a rebound in the last couple of years but you know for bitcoin i think those other institutional categories that i mentioned are probably far more likely to see meaningful adoption sovereign wealth funds pension funds insurers endowments foundations family offices than our central banks could happen you know there have been more surprising things that have happened certainly there's discussions in various countries about the strategic value of accumulating some some degree of bitcoin reserve so that is happening but i would say that's kind of an out of the money option at this point in bitcoin's valuation let's talk more.

[B]

About the etf's so the two big etf's that blackrock has launched are ibit the bitcoin etf and eth a the ethereum etf how successful have these products been and can you put this in i guess a comparative lens with other etf's that you've launched over the many decades at blackrock yeah it's been pretty.

[A]

Amazing right and i think that what's happened is the value prop of being able to hold these assets in a accessible turnkey convenient low cost way for the traditional investor the institution the financial advisor can be traded as conveniently and held as owning any stock has been massive a meaningful share of the investor base and particularly of new adopters the etf has been resoundingly their vehicle of choice and the way that's manifested you combine that the value prop of the etf wrapper which has tremendous appeal obviously there's a reason that there's many trillions in assets held that way today with bitcoin and with ether which have justifiably generated a lot of excitement from now hundreds of millions of people over the world you get a recipe for what we saw which was unprecedented levels of of inflows and asset growth so ibit today has been the fastest growing etf post launch in in history you know fastest to reach eighty billion by a factor of roughly four x faster than the prior record and then ether has been the third fastest in history to its respective milestones along the curve ten billion and now fifteen billion so it's been quite a remarkable couple years no.

[B]

Question etha had a bit of a slower start the ibit etf was just like rockstar from the very beginning it has felt like the ethereum etf's they really took off during the summer and i don't know if this was the the tom lee effect or what tom lee launched of course his ethereum dat strategy over the summer seemed like the ethereum etf's were really catching a bid this summer although the inflow has been positive for quite some time what changed and how do you explain the more recent uptick in the ethereum etf has this been a narrative that has finally.

[A]

Clicked well i think for one sentiment in ether had gotten overly negative if we think back to this winter i think it got even below seventeen hundred and it was kind of all doom and gloom i think that was a little bit overdone and so there was some element of a relief rally once that reversed and people recognize that there's still lots to be excited about in ethereum and i think it was also helped frankly by the genius bill and optimism around stablecoins and the growth of that as a really powerful use case i mean there's lots of people who look at this space and you know maybe they've struggled to to really resonate with it and lots of the different applications that have been thrown out and that have been explored over the years but stablecoins is is such a logical one to so many people when you see what an unlock that is for moving value around the world in a low cost efficient way so stablecoins i think some of its optimism around tokenization which obviously has been a topic that's generated a lot of excitement particularly in the last year and we've seen green shoots of progress in terms of growth and adoption there and so i think all those things together were enough to really change sentiment and get folks attention that drove what you know was a pretty extraordinary summer of inflows and price.

[B]

Action this word tokenization this has been a word that larry fink has uttered more than a few times recently i was watching him on cnbc i think it was a week or so ago and he said this i believe we're at the beginning of the tokenization of all assets from real estate to equities to bonds across the board and he described this as taking traditional financial assets and repotting them kind of a tokenization shell can you paint the vision of how that happens so we obviously we have stablecoins so that's one form of tokenization but larry's talking about tokenizing all of the financial assets that we have so how do we go from here to there what's the tokenization roadmap for.

[A]

Blackrock well we as you know really started with bittle as our first public blockchain tokenized fund it's a tokenized private money market fund and that's been very successful right almost three billion in assets and the key unlock there and i think this is a really important point to remember it's all about taking the generalized value prop of tokenization which has lots of exciting things right twenty four seven real time settlement digitally native global interoperable programmable and saying how do we deploy that in a given asset class in a way that creates material new value or utility for investors right and so in the case of biddle and in general in the case of money market funds tokenizing them has broken the paradigm that previously existed that forced you to choose between capturing full yield on your us dollar savings and having full liquidity right for the first time you could hold us dollars in a tokenized money market fund and then as soon as you needed liquidity to make a payment or settle a trade et cetera you could convert that to a stablecoin and that i think is a really powerful value proposition that's why this asset class far and above any others to date has seen real growth and adoption and tokenization so now the question is where do we go next and a lot of it is going to stay in this category right because there's lots more to do to be able to open up access and serve more and more clients and investors but also it's about figuring out what are the second and third next most viable asset classes where you can use tokenization to drive real utility to expand access to create an incrementally distinctive level of value for users of that and that's the journey.

[B]

We'Re on now it seems like an exciting journey i noticed a headline that i didn't quite understand it was earlier this month and it was blackrock unveiling a genius act aligned money market fund i wasn't actually sure if this was biddle or something else and what in particular needs to be genius act aligned what does that unlock for money markets and other tokenized products at blackrock sure.

[A]

So there's a regulatory construct in the us called two a seven and that describes a very specific very strict approach to managing a money market fund that is meant to effectively maximize liquidity and safety of the way that's held and it turns out that the genius act prescribed a reserve management framework that was quite similar to two a seven but not quite the same i see and so what that headline was referring to was an existing fund that's a two a seven fund simply having some slight modifications to the reserve management approach that would make it a viable option as a genius compliant measure now that fund is not tokenized right but that is saying to the extent there are potential money market fund clients who do need to hold their assets in a genius compliant way that's a vehicle that historically has always been two a seven compliant now it's also going to be genius.

[B]

Compliant so this is about blackrock getting its money market funds in a position such that they can be used by other companies to essentially back their own stablecoins so this could be the backing for other stablecoins out there that's right.

[A]

We would expect that the vast majority of stablecoin reserve assets are going to be in money market funds and that's a competency that we are very deep in blackrock we manage roughly a trillion dollars in liquidity funds and money market funds globally and so it's exciting to see the growth in stablecoins which we're big believers in we've had a long standing partnership with circle dating back to twenty twenty two and the growth of usdc particularly in the last year has been amazing to watch and we're very excited for that and so this is a category that's going to i think continue to grow in significant ways last.

[B]

Time you were here we asked a question about tokenization in terms of what's missing right what's missing to get tokenization off to the races and you said there were three things that were missing institutional custodians secondary marketplaces and more regulatory clarity in the past twelve months or so how far have we come on those three dimensions of what was missing.

[A]

So i think the first one actually tremendous progress in a little over a year where a number of the largest global banks global custodians have or are developing capabilities for custody of both crypto and tokenized assets so i think outstanding progress on that front and that's going to be critical certainly because if you think of the majority of institutional investors they intend to they would want to if they're going to hold an asset that they used to hold in a non tokenized form and now they're going to hold in a tokenized form they would way rather be able to just do that with the existing custodian that they use for whatever that asset class is or whatever that fund category is.

[B]

And now that's possible much more well.

[A]

It'S it's made tremendous progress i would say it's not quite there in a fully ubiquitous way but it certainly seems to be headed in that direction liquidity venues i would say mixed there's been tremendous progress obviously in the defi world of creating platforms for tokenized assets to trade and also to do other things with them to borrow against them to use them as collateral et cetera but less so in sort of the tradfi exchange world extending into tokenization and listing assets and so i think that may yet come and certainly we've seen some announcements to that effect in recent months and then the third piece the regulatory clarity and this is the really interesting one as much as this sec has been incredibly supportive of innovation in this space this is a really hard problem it's not as simple i think crypto people sometimes need to realize that regulatory clarity doesn't just mean clarity that there are no rules and so there actually is a really complex challenge before us as an industry and frankly in concert with with agencies like the sec to figure out how to make the ulta rules and what novel rules and exceptions come into play that harness the innovative potential and opportunities from this technology without undermining some of the key principles that exist in market structure today and i don't think there's anyone in the world who has written down on a piece of paper here's all the answers if only the regulators would do this then it would be great it's a really hard set of problems to solve and that's a journey that we're on with other players around the ecosystem and with.

[C]

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[B]

On this journey of regulatory clarity is this going to take bills in congress is this going to take something like the clarity act or is this is most of the block blocking tackling behind this sort of rulemaking with regulators and sort of just defining processes and the nitty gritty of things what's it going.

[A]

To take i think it's meaningfully more complicated to try to create legislation to address all the tokenization related regulatory challenges and so i think that that is more likely to happen at the agency level than necessarily through a new piece of legislation we'll see how that plays out right there have been points where that idea has been floated of trying to tackle tokenization within clarity or within a separate bill and that may yet happen but you know there's as i said it just it's a pretty complex topic the good news is there's a lot of positive energy around finding ways to help make this work to support innovation in the space particularly innovation around tokenization so i do as hard as the challenge is i'm quite optimistic and.

[B]

Then do you feel like we've made progress on that so if it's a lot of blocking tackling regulators you're just sort of defining things twelve months ago i don't know where we were but now as you look forward to where we are now and even looking forward over the next twelve months do you get the sense that we're making a lot of progress that we're on the.

[A]

Right track i think so i think that frankly what needed to happen was for players in the ecosystem to actually do the work knowing that there was an opportunity to engage with regulators and figure out solutions to these problems for people in industry to do the work of actually defining in a very clear way what the problems were and what a reasonable set of solutions would look like i think that work has happened on a lot of fronts now there's a process of engaging with regulators in a very consultative way it's been very sort of consultative collaborative process to try to put that into action and deliver the clarity that's needed so if we.

[B]

Have the institutional custodians if that's kind of check mark and we're on the path towards greater regulatory clarity will we get the third by virtue of that so once we have more of the regulatory clarity will we get the secondary marketplaces will we get the liquidity and is this all falling into place now.

[A]

I think that is the natural progression of it so obviously this is a space that we're spending a lot of time on as a firm lots of players around the ecosystem are and i think that these elements of progress across those three threads that we've talked about do have a self reinforcing sort of flywheel effect compounding off of each other and so you know this will be a pretty pivotal twenty four to thirty six months ahead where tokenization really has an opportunity to prove itself in generating adoption and driving real incremental utility and efficiency in markets in the way that has long been held out as a real area of promise what's the bull.

[B]

Case if we look forward to say five years from now ten years from now for tokenization i recall you saying last time it's kind of a binary either we have kind of no tokens none of this works or basically everything we have many tokens everything is tokenized so looking at kind of wall street and us capital markets in five to ten years is basically all of our assets when it comes to etf's or stocks or real estate just everything under the sun is it all available in some sort of token form and all of this available on kind of your your aladdin platform let's say well that.

[A]

Is the bull case i think five is probably too soon but you know when you talk about ten with all these technology innovations right there is a s curve where if you really hit liftoff the rate of adoption can really accelerate and there can be a fast paced migration to a new technology paradigm and that's the journey that we're on and as you noted there were many asset classes that are pretty interesting candidates for this obviously we started with money market funds but you think about stocks bonds etf's commodities real estate private markets funds lots of asset classes that have been tried with mixed degrees of success but once you have a bunch of asset classes that hit that inflection point it becomes a lot a lot easier to bring along other asset classes in behind it because more and more people are migrating to that new infrastructure paradigm and they've built comfort with it and they've built the capabilities and the systems to be able to interact with it.

[B]

Who'S left to convince on wall street robby so i think crypto's taken a while to really saturate in wall street it feels like this cycle we had some major achievements on that score even jamie dimon i think there was a clip from last week he's got this quote crypto is real blockchain stablecoins jp morgan deposit coin you can move stuff smart contracts are real all this stuff is real it'll be used by all of us to facilitate better transactions and customer service this is even jamie dimon who has himself been crypto skeptical in the past seemingly warming up even further to crypto is that everybody we've got blackrock we've got jp morgan is there anyone else left on wall street to.

[A]

Convince well frankly jp morgan has been a great leader in this space and they have been for many years and that's you know they've done a lot of development work around tokenization they're a huge player in the ibit ecosystem they've been a leader there so they've been innovating i think frankly the group that needs to still be convinced is actual investors right because that's one of the challenges that tokenization has faced so far is that these projects will develop tokenized asset offerings and the end investor demand hasn't always showed up right and that's not their fault it comes back to what is the actual tangible utility unlock that you're using tokenization to generate for me and does that overcome the inertia effect and whatever risk and operational complexity is involved in migrating to that new format and so the bar for that is pretty high and we've passed that.

[B]

With stablecoins but it's not clear that we've passed that with other assets maybe flip this is there maybe a more bearish case for tokenization so what if we only get to stablecoins and money market funds that kind of back stablecoins and the biddle fund and that sort of thing and nothing else takes off can you envision that world like what would go wrong do you think with tokenization in order to have that type of a more bearish outcome yeah i.

[A]

Think that probably the bear case is that only stablecoins work right it's hard to imagine a world where not even stablecoins have significant adoption because already today it's three hundred billion in market cap right and that's in a pretty high interest rate environment which is remarkable right so a stablecoin value proposition this ability to move money around the world in near real time at near zero cost between any two people with a smartphone to get access the world over to digital us dollars which many many billions of people around the world have shown a clear desire to be able to have that access that horse has left the barn and it's just a question of how fast and how broadly adopted across other domains to stablecoins get whether we're talking about you know retail remittances which are massively inefficient today cross border payments for corporate multinationals which have you know lots of frictions and costs associated with them and maybe more ambitiously financial market settlement activities so subscribing and redeeming from funds in stablecoins settling trades in stablecoins processing corporate actions margin and collateral in stablecoins so lots of pretty exciting applications for it that i think is if that's the bear case for tokenization it's actually not that bad i mean.

[B]

Even the bear case i guess with stablecoins and the genius bill it's not clear that that's been i guess fully priced in it seems to you said the horse has left the barn but it seems like we are only getting started on that how is that going to shake things up or change things across traditional finance i mean will this change the structure of banks there have been some instances where you know maybe some banks are not favorable of letting interest go to say crypto exchanges at least there's been some fights about this but one gets the sense that the underlying structure of traditional finance will be shaken up will change a little bit with the advent of stablecoins do you know how do you have any predictions.

[A]

Well what's interesting is i think if the industry executes well then the whole sort of fight over interest which ultimately was banned in the genius bill becomes not that big of an issue because tokenized yield funds become the natural vehicle through which users hold us dollars on a sort of going concern basis digital us dollars and capture that full interest and they're holding these assets which are clearly securities but that's okay because they're being used to hold not to make payments and then the moment they need to make a payment or settle a trade they convert right and so stablecoins become sort of the operating cash and tokenized yield funds become the investment or hold cash and the latter is where you capture yield so even if stable coins don't pay any yield they're still going to be very useful in payments and we sort of see that as the natural future state of this ecosystem and obviously to do that you need to really drive frictions to zero pretty much in moving between tokenized yield funds and stablecoins you need to have tokenized yield funds that are accessible and that have you know essentially instant and very very cheap liquidity convertibility back and forth between themselves in stablecoins if we have.

[B]

That do you see a world where we have many different stablecoins or right now we have kind of two power law winners there's tether and usdc from circle but will that change will we have hundreds maybe thousands of different stablecoins.

[A]

I don't think so network effects are really powerful in the stablecoin space and so there's a lot of value in being widely accepted in having liquidity from a trading perspective and being you know used on platforms ultimately in the future in having liquidity and volume in a foreign exchange pair against that stablecoin so you know i think you'll continue to see you know growth in the industry and healthy competition but i certainly wouldn't expect we'll have you know a thousand different stablecoins i don't see that level of fragmentation as being efficient we're getting.

[B]

Closer to the end of twenty twenty five and the beginning of twenty twenty six if you fast forward and you think about maybe november of twenty twenty six what do you hope that crypto has accomplished by that time what does it look like are there some major things in your mind and maybe the same question for blackrock yeah i think.

[A]

That the big test of the next year plus is going to be okay for many years there was frustration over an absence of regulatory clarity in the us right and certainly some of that was a fair complaint but it became almost a mantra or cliche at points to hear regulatory clarity regulatory clarity now that's coming it's been a very supportive environment from that standpoint over the course of twenty twenty five and so the test is going to be prove it show the adoption show the real economic use cases and there's obviously lots of really exciting early proof point proof of concept type stuff happening particularly in the defi world but show me the examples of places where we as a human society or economy either couldn't do something or we had to do it but in a really inefficient way and then using blockchain or using digital assets we've now solved that and we do it overwhelmingly using blockchain in a much more efficient way right and to date there's been a pretty short list of things that fit that category bitcoin as the first monetary instrument in three thousand years to gain global adoption because of its technological breakthroughs stablecoins and moving value around the world in a ten x better more efficient way and a handful of things that are happening on ethereum and some of these other blockchains but that sort of tidal wave of really powerful use cases i think we're still waiting on beyond that and now it's finally the environment where that regulatory support exists and so it's time to prove it.

[B]

Twenty twenty six is the show me phase maybe it's the building phase robbie this has been great i mean last question so every cycle we have institutions who talk about crypto but they don't necessarily follow through and build or get very excited during the bull market but they head for the exit as things turn down the bear market and so for those institutional investors or those institutions who are building on crypto and this is maybe their first cycle actually in they see this volatility they see the thirty billion dollars sell off or red days like today where this looks to be maybe a negative ten percent on total crypto market cap and they start heading for the exit what's your advice.

[A]

To them well i think my advice is more for the people coming in and how they approach the space i think it's very important to be discerning and to be very particular about which assets one is going to hold right there's a reason bitcoin is still roughly sixty five percent of the market cap of the space because it has very clear product market fit and investor narrative and a big addressable market as this digital gold like asset there's a reason there's consolidation in a lot of the rest of the market cap in a few top assets which is those are the handful that have really proven themselves and developed some degree of product market fit and economic utility one has to be very wary going far down the table there's hundreds of thousands of crypto assets out there today the vast majority of those are or will be totally worthless and so investors have to be careful around that and they also i think should be wary around trading on a short term basis certainly short term levered basis is a tough game a lot of times in the crypto space and i think the people who've done the best in this space have taken a much more long term fundamental view and understood that you have to be patient and you have to understand that there's volatility in this space and there.

[B]

Will be cycles robby michnick thank you so much for joining us best of luck to blackrock in the show me phase of twenty twenty six i appreciate.

[A]

Your time today thank you ryan good.

[B]

To see you got to let you know none of this has been financial advice of course you could lose what you put in but we are headed west this is the frontier so not for everyone but we're glad to have you on the bankless journey thanks a lot.