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Tokenized, Inc: BlackRock’s Plan To Own The Fractionalized World

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Just one day after the January 11 approval of 11 Bitcoin spot ETFs – including BlackRock’s iShares Bitcoin Trust (IBIT) – by the U.S. Securities and Exchange Commission, BlackRock Chair and CEO Larry Fink sat down with Bloomberg’s David Westin to discuss the implications of the world’s largest asset manager entering the Bitcoin market. Not one to mince words, Fink articulated a clear framework for his company’s approach to Bitcoin, and furthermore for BlackRock’s intention to replicate similar ETF products for other assets. “If we can ‘ETF’ a Bitcoin, imagine what we can do with all financial instruments.” Fink continued, speaking about Bitcoin itself, stating “I don’t believe it’s ever going to be a currency. I believe it’s an asset class.”

Bitcoin: Commodity, Not Currency

While the BlackRock Chair was not shy about expressing other aspects of the potential build of tokenized, digital markets, these two statements in particular illuminate the coveted path forward for how the biggest institutions intend to carefully integrate Bitcoin into the legacy financial system. Fink even went so far as to turn the abbreviated noun “ETF,” an exchange-traded fund, into a verb, gloating about transmuting the Bitcoin protocol into just another speculative commodity – all the efforts of miners and nodes across the world to decentralize trust in issuance and settlement reduced to a paper offering by their iShares division.

The biggest players in the United States dollar system are all but clamoring over each other to offer such products to their retail customers, understanding that this axiom neuters Bitcoin as a viable currency capable of competing with the day-to day bargaining and settlement utility of the dollar. There are many reasons to believe the US dollar system has much to gain from a dollar-denominated appreciation of bitcoin, but significantly less so if the protocol itself is capable of serving the everyday transactional needs of billions across the globe. One of the most common rebuttals to the claim that bitcoin cannot scale to become a functioning currency is the Lightning Network. While the trustless method of shared unspent transaction outputs (UTXOs) via hashed time locked contracts (HTLCs) payment channels is quite novel, the ultimate endgame for such a model servicing billions necessitates a large amount of liquidity (in bitcoin terms) locked up within the network. A centralized Lightning Network brings about many issues of privacy, transactional censorship, and even user access restrictions, not to mention the mathematical realities of demand for Bitcoin’s limited blockspace when opening a billion channels.

Many FinTech companies, such as Lightning Labs and Blockstream, have spent millions in capital developing methods for utilizing Bitcoin as a way to issue tokenized assets, such as stablecoins like Tether’s USDT, in order to transact dollar-denominated tokens via Lightning channels or federated sidechains. While the institutional adoption dreamed of by early Bitcoin adopters has certainly come to fruition, the actualization and methods of these institutions is clear: bitcoin must remain an asset, and all effort on scaling it as a currency should be directed towards the dollar. Fink himself in the same Bloomberg interview stated “We believe ETFs are a technology no different than Bitcoin was a technology for asset storage.” Bitcoin Spot ETF products encourage many practices far outside the norm of the typical Bitcoin user within the near decade and a half of its existence; e.g. trusting a custodian with your keys, limiting exchange to US business days and hours, and aggregating individual exposure into a collective paper claim managed and surveilled by highly-regulated brokers.

The anti-State revolution that has dominated most Bitcoin discourse since 2009 has become colored by red, white, and blue ticker tape. Furthering the idea that the US has much to gain from the adoption and co-option of Bitcoin is the tangible stash of coins distributed within its borders; MicroStrategy’s 189,150 bitcoin, the 215,000 bitcoin seized by the Department of Justice, Block.one’s 164,000, Grayscale’s 487,000 in GBTC, and now the new US spot ETF offerings hold a combined 170,174 bitcoin as of 1/31. This is inarguably a meaningful portion of the circulating supply of bitcoin, not to mention the likely possibility of further treasuries held off the books by American investors. Bitcoin is already making US ETF inflow history, as the combined growth within the first two weeks has already outpaced the decades-long entirety of the silver spot ETF market. Any liquidity needed for an institutional Lightning Network that could compete with legacy payment providers such as Visa or MasterCard is already safely nestled within the borders of the United States, and thus well-within reach of the regulatory arms of the DoJ, SEC, Treasury, and Federal Reserve.

Within the S-1 Registration Statement filing for the iShares’ Bitcoin Trust (IBIT) application is a clause that states:

“The Trustee will dissolve the Trust if…a U.S. federal or state court or regulator, or applicable law or regulatory requirements, requires the Trust to shut down, or forces the Trust to liquidate its bitcoin, or seizes, impounds or otherwise restricts access to Trust assets;”

While this may appear as simply due diligence for a securities offering, there is recent precedent of an iShares product being liquidated after pressure from the SEC due to geopolitical advancements, specifically the Russian invasion of Ukraine. In a press release from that same day, the iShares MSCI Russia ETF (ERUS) announced the suspension of “right of redemption of fund shares pursuant to an exemptive order issued by the [SEC]”, effective August 3, 2022, in order to “permit the fund to liquidate its portfolio.” Two weeks after the announcement, the press release stated that “BlackRock will begin liquidating ERUS by distributing its current liquid assets to shareholders,” after removing the estimated fees associated with the liquidation and transactions. Russian forces’ incursion into Ukraine triggered capital controls and sanctions from the consortium of related regulatory arms of the US government, which in turn restricted BlackRock – and all non-Russian investors – from participating in the Russian securities market. The final clause of the press release communicates that due to the unknown circumstances, “there can be no assurance that shareholders would receive any liquidating distribution relating to the Russian securities and depositary receipts after the initial distribution.”

One does not have to look too far back into recent history to see the last time the United States found itself face to face with its own geopolitical crisis during the COVID-19-induced lockdown and stimulus spearheaded by the Trump administration. BlackRock was chosen by the Federal Reserve during the third week of March 2020 to manage three debt buying programs, not to mention Canada’s central bank hiring Fink’s firm to advise commercial paper purchases, nor the contract they were given by the European Union banking system to aid in sustainability. “People like Larry Fink we’re talking to, that’s BlackRock – we have the smartest people, and they all want to do it,” Trump told reporters during a White House press appearance in which he announced the largest stimulus package in the country’s history – a $2 trillion bill.

Before entering the White House, Fink had helped manage Trump’s finances, and after a 2017 meeting with his administration, made note of his previous relationship by stating “In every meeting we had, he talked about doing more…I didn’t think ‘doing more’ meant [being] the president.” It was no surprise then that just three years later, Trump would be employing Fink once again to manage the stimulus distribution programs alongside former majority BlackRock shareholder, Bank of America. “I do believe it’s going to continue to bring opportunities for us,” Fink stated during a 2020 earnings call, referring to government assignments. As if predicting the coming profiteering off the unprecedented government lockdowns, in a 2011 interview with Bloomberg, Fink went so far as to say “Markets don’t like uncertainty. Markets like, actually, totalitarian governments… Democracies are very messy.”

BlackRock and Fink’s habit of aiding the government during moments of crisis started long before 2020, however, with the asset manager also playing a large role in the aftermath of the 2008 Great Financial Crisis. The 2008 crash significantly influenced a shift in financial markets, with investors increasingly embracing ETFs. Having held only $531 billion in 2008, according to data from Bloomberg, these funds now hold approximately $4 trillion in the US – a substantial and consequential increase.

BlackRock’s ascent to prominence owes much to its strategic embrace of ETFs. Originally focused on bonds, the firm managed assets worth about $1.3 trillion at the end of 2008. BlackRock’s pivotal move into ETFs came with its acquisition of Barclays Global Investors in 2009, which followed Barclays’ decision to sell only after opting out of UK government bailout assistance. It was in this merger that BlackRock purchased the iShares brand from Barclays. The New York-based BlackRock paid $13.5 billion to the London-based Barclays, and by the time the deal closed at the start of December 2009, BlackRock had doubled its assets under management from $1.44 trillion to $3.29 trillion. This made BlackRock the world’s biggest money manager – a crown it still wears. Presently, BlackRock also holds the distinction of being the world’s largest global issuer of ETFs.

BlackRock’s involvement in government advisory services solidified critical partnerships in the aftermath of the 2008 crisis. The company secured mandates to manage portfolios laden with toxic assets from entities like Bear Stearns, American International Group Inc., Freddie Mac, Morgan Stanley, and others, leveraging CEO Fink’s expertise in structuring mortgage-backed securities, a field which he had helped pioneer.

As Fink stated in 2020:

“I started at First Boston in 1976..I was the first Freddie Mac Bond Trader…and so the mortgage Market was just in its infancy…And then in 1982 we had the ability to put a PC on our trading desk. Before that you had no ability to put a computer on that trading desk. And it was very clear to me that if we could have computing power on the trading desk, we were going to have the ability to dissect cash flows of mortgages. That led in 1983 to the first carving up of a mortgage into different tranches. And so we created the first CMO.”

Fink had started his career at a trading desk at First Boston in 1976, and was quickly made head of a division in the then-unknown mortgage-backed securities market, which is estimated to have eventually added $1 billion to the firm’s books. He was also instrumental in the $4.6 billion securitization of GMAC auto loans at the start of 1986 and became the youngest member of its management committee at 31 when he was made managing director. After getting caught on the wrong end of then-Fed Chair Paul Volcker’s unprecedented interest rate manipulation in the late 1980s, his desk lost $100 million in the second quarter of 1986. First Boston made it clear that when Fink finally left the firm in 1988, he had been fired.

Despite his difficult exit from First Boston, over the next two decades Fink’s new firm BlackRock would become an integral figure within the public-private merger of the US dollar system. For example, in the summer of 2011, then-US Treasury secretary Tim Geithner was negotiating the raise of the debt-ceiling. After an agreement was made on the last day of July, Fink was the second number dialed from Geithner’s office, only behind then-Fed Chair Ben Bernanke. The Treasury secretary also made calls that day to Lloyd Blankfein, then-CEO of Goldman Sachs, and J.P. Morgan’s Jamie Dimon. According to reports, Geithner had called Fink “at least 49” times during the previous 18 months – a testament to BlackRock’s political influence.

Much like it positioned itself close to regulators and governments during 2008 and 2020 to maximize profiteering within the private sector during a global economic crisis, BlackRock today finds itself cozied up to the public sector as the country deals with the downstream effects of the largest stimulus packages in history, and the US dollar system readies itself to embrace bitcoin in a meaningful way.

Many of the popular arguments for why bitcoin is a better store of value than gold or other precious metals are predicated on the idea that the underlying price discovery within their markets reject fractionalized gamification and tokenized re-hypothecation due to the ever-auditable nature of Bitcoin’s blockchain. The practice of “papering” gold is but the antiquated mechanic of the coming tokenized world. “We have the technology to tokenize today,” Fink told CNBC. “If you had a tokenized security… the moment you buy or sell an instrument, it’s known it’s on a general ledger that is all created together.” Market makers such as BlackRock entering the Bitcoin space are relying on Number Go Up-induced amnesia of their lengthy forays into asset manipulation, alongside a false understanding of blockchain’s technology ability to limit fraud. Fink finishes his handwaving by outright stating: “This eliminates all corruption, having a tokenized system.”

Corrupting The Ledger: Market Manipulators

At the end of 2023 on December 23, just two weeks before the Bitcoin Spot ETFs were approved, BlackRock named American banking titan J.P. Morgan, alongside Jane Street Capital, as “their authorized participants” in filing with the SEC. At the time, this made BlackRock the first Bitcoin Spot ETF applicant to select who would be responsible for acquiring the necessary bitcoin, in this case on behalf of the iShares issuance. This was seen as a surprising move due to J.P. Morgan Chase CEO Jamie Dimon’s recent negative comments on Bitcoin. “I’ve always been deeply opposed to crypto, bitcoin, etc.,” the Board of Directors member for the Federal Reserve Bank of New York said during a Senate Banking Committee hearing last December. “The only true use case for it is criminals, drug traffickers…money laundering, [and] tax avoidance.” He later added, “If I was the government, I’d close it down.”

Despite the public rhetoric from Dimon, J.P. Morgan debuted the Tokenized Collateral Network, or TCN, in October 2023, as the largest US bank by assets facilitated a transfer of tokenized money market funds from BlackRock to Barclays for collateral within an over-the-counter (OTC) derivatives trade. A few years prior to their ventures in blockchain settlement and Bitcoin ETF participation, J.P. Morgan won the rights to manage over a $1 trillion in assets for BlackRock, taking the business from State Street Corp in a deal struck in January 2017, firmly placing J.P. Morgan behind only BNY Mellon for total assets under custody. Later on, in 2021, BlackRock announced further diversification from custodian State Street with partnerships with BNY Mellon and Citigroup to custody assets from their iShares division. BlackRock said Citigroup will handle around “40% of the funds” while J.P. Morgan takes 30% and “BNY Mellon and State Street each take 15%.”

While Fink may believe that somehow blockchain technology will supplant corruption in financial markets, he routinely finds himself paired with the notorious criminal banking enterprise led by Dimon. After a three-week trial at the end of Summer 2022, Michael Nowak and Gregg Smith – the former head of the J.P. Morgan’s precious-metals business and lead gold trader – were convicted on fraud, manipulation, and spoofing charges by a federal jury in Chicago. The US Justice Department alleged “the precious-metals business at J.P. Morgan was run as a criminal enterprise” in their biggest ever case of financial fraud. During closing arguments, head prosecutor Avi Perry stated that “they had the power to move the market, the power to manipulate the worldwide price of gold.”

In a September 2020 release from the Commodity Futures Trading Commission, the CFTC stated that:

“…from at least 2008 through 2016, JPM, through numerous traders on its precious metals and Treasuries trading desks, including the heads of both desks, placed hundreds of thousands of orders to buy or sell certain gold, silver, platinum, palladium, Treasury note, and Treasury bond futures contracts with the intent to cancel those orders prior to execution. Through these spoof orders, the traders intentionally sent false signals of supply or demand designed to deceive market participants into executing against other orders they wanted filled. According to the order, in many instances, JPM traders acted with the intent to manipulate market prices and ultimately did cause artificial prices.”

The order also found that J.P. Morgan Securities, a “registered futures commission merchant” had “failed to identify, investigate, and stop the misconduct.” Despite “numerous red flags, including internal surveillance alerts, inquiries from CME and the CFTC,” and even with an employee alleging misconduct, JPMS “failed to provide supervision to its employees sufficient to enable JPMS to identify, adequately investigate, and put a stop to the misconduct.” The CFTC order also notes that at the start of investigation, J.P. Morgan “responded to certain information requests in a manner that resulted in the Division being misled.”

J.P Morgan was forced to pay nearly $1 billion to settle allegations of fraud within the precious metals and Treasury markets, with the final $920 million tally being by far the largest fine by a financial institution caught manipulating markets since BlackRock shareholder Bank of America’s nearly $17 billion dollar fine for its role in the financial crisis of 2008. “At almost $17 billion, today’s agreement with Bank of America stands as the largest the department has ever made with a single entity in American history,” stated then-Associate Attorney General Tony West.

Then-Attorney General Eric Holder and West disclosed on August 21, 2014 that the Department of Justice had finalized a $16.65 billion settlement with Bank of America Corporation – the most substantial civil settlement with a single entity in American history — to address federal and state claims against BofA and its past and present subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this resolution, the bank committed to a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the most significant FIRREA penalty ever – and pledged billions of dollars in relief to distressed homeowners. The Justice Department and the bank resolved several ongoing civil investigations related to the “packaging, marketing, sale, arrangement, structuring and issuance” of residential mortgage-backed securities (RMBS), collateralized debt obligations (CDOs), and the bank’s practices regarding the underwriting and origination of mortgage loans. The settlement incorporated a statement of facts, in which the bank acknowledged selling billions of dollars of RMBS without disclosing key facts about the quality of the securitized loans to investors. The bank also admitted to originating risky mortgage loans and providing misleading information about the quality of those loans to Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).

As for BlackRock itself, the SEC fined the firm $2.5 million in October 2023 for “failing to accurately describe investments,” in additional to $12.5 million in April 2015 for “failing to disclose a conflict of interest of a portfolio manager who ran another business,” as well as $340,000 “to settle charges that it improperly used separation agreements in which exiting employees were forced to waive their ability to obtain whistleblower awards.” Outside of the US, The Financial Services Authority of the UK fined BlackRock nearly £10 million in September 2012, the second-largest fine levied by the FSA – £33 million paid by J.P. Morgan for the same charge – for “failing to protect client money.”

BlackRock and its partners have been a part of some of the largest financial crimes in US history, not to mention the sudden liquidation of iShares’ ERUS due to pressure from the SEC after certain geopolitical developments. Fink wants you to believe the tokenization of real world assets via the blockchain will eliminate corruption – the very corruption his company and affiliates have been demonstrating is entirely possible in supposedly highly-regulated markets for decades.

Within the announcement for J.P. Morgan’s Tokenized Collateral Network, Tom McGrath, the Deputy Global Chief Operating Officer of Cash Management at BlackRock stated “Money market funds play an important role in providing liquidity to investors in times of high market volatility. The tokenization of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures.” Fink’s firm was exceptionally well-positioned to take advantage of the “high market volatility” and “acute margin pressures” of both 2008 and 2020. It appears that is no different today.

As BlackRock dramatically shifts from shying away from Bitcoin due to projected ESG-related concerns downstream of its energy usage, and pivots into a full-on embrace of blockchain as a foundation of the future financial market it intends to dominate, a walk through Fink’s recent dealings in “green finance” remind us not to follow the rhetoric spewed, but rather the flow of the greenbacks themselves.

Nature, The New Gold

BlackRock’s manipulative tactics also apply to its overtures in ESG investing and carbon markets, both of which have long been championed by Fink until anti-ESG sentiment pushed him to soften his public stance. Despite Fink’s decision to avoid using the term ESG, he and BlackRock remain committed to “climate finance” and “green finance,” not because of an environmental benefits it may produce, but because of the new markets and asset classes it seeks to create.

In 2020, BlackRock, J.P. Morgan and Disney were criticized in an investigative report from Bloomberg for their substantial involvement in carbon-offset projects run by the Nature Conservancy. More specifically, BlackRock, J.P. Morgan and Disney had purchased a significant amount of credits from the Nature Conservancy to offset their CO2 emissions. However, those credits were ultimately found to be meaningless, as many of the credits were tied to forests that were never danger of being cut down, but were publicly framed as being endangered and thus “preserved” by the carbon offset credit scheme. In other words, BlackRock and others were buying “empty” carbon offset credits so they could posture as being “green” and placing themselves in a very advantageous position for any future implementation of a global carbon market (something which Fink has frequently promoted).

While the Nature Conservancy is technically an environmental non-profit, it has functioned as a front for Wall Street banks to test out a host of “green” finance and climate finance initiatives, including but also going far beyond carbon markets. For instance, for many years, the chair of the board of the Nature Conservancy was Henry “Hank” Paulson, the long-time Goldman Sachs executive who served as Treasury Secretary under George W. Bush and during the 2008 financial crisis. One of the firm’s recent presidents, Mark Tercek, also hailed from Goldman Sachs. Its current board includes top executives from J.P. Morgan, Santander, the Carlyle Group, and Goldman Sachs. Until a few years ago, Larry Fink himself was also on the Nature Conservancy’s board.

In 2014, the banker-dominated Nature Conservancy launched NatureVest, the group’s impact investing arm which “aims to help institutional investors and wealthy individuals understand and harness market opportunities for investing in nature.” The founding sponsor of NatureVest was J.P. Morgan, which remains very involved in its activities, and the current head of NatureVest, Matthew Arnold, was previously Head of Impact and Sustainable Finance at J.P. Morgan. NatureVest is one of the main groups pioneering debt-for-nature and debt-for-conservation swaps. These swaps, such as the one overseen by the Nature Conservancy in Belize in 2021, restructure part of a country’s debt through “blue” or “green” loans tied to powerful banks like Credit Suisse that are then used, not to finance any real conservation, but to force a country to take out private insurance policies to “mitigate the financial impact of natural disasters” as well as “political risk.” Countries that have engaged with these Nature Conservancy-brokered swaps have also been compelled to adopt Marine Spatial plans designed by the Nature Conservancy, some of which prevent locals from using coastal ecosystems for essential economic activity and sustenance, such as artisanal fishing.

In 2021, the same year as the Nature Conservancy’s debt-for-conservation swap in Belize, Larry Fink publicly spoke about the need to “reimagine” the World Bank and IMF. Fink’s comments, delivered during COP26, were directly related to the efforts of the Global Financial Alliance for Net Zero (GFANZ), where Fink is a principal, to re-create the “global financial governance system.” This “reimagining” ultimately involves expanding the “debt slavery” model for which the World Bank and IMF have been heavily (and rightfully) criticized in order to spur “sustainable development.” Notably, the World Bank has called debt “a critical form of financing for the [UN’s] sustainable development goals,” particularly in emerging economies. More recently, this past November, a unit of BlackRock developed a plan to reform multi-lateral development banks, including the World Bank, reforms they claim would “free up to $4 trillion in climate change funding.”

The co-chair of GFANZ, current UN envoy for climate action and central banker Mark Carney, had spoken of the need to re-create the global financial system a few years before he oversaw GFANZ’s creation under the auspices of the UN. Speaking at Jackson Hole in 2019, Carney – then governor of the Bank of England – called for an entirely new financial system built around “multipolarity” and “inclusivity.” He concluded his speech by stating: “Let’s end the malign neglect of the IMFS [international monetary financial system] and build a system worthy of the diverse, multipolar global economy that is emerging.” Carney has since made it clear that this new IMFS should involve new “multipolar” currencies, including CBDCs, and global carbon markets.

GFANZ, which comprises some of the most powerful private banks and financial institutions in the world, has been very open about their ambitions. Their goals include merging the powerful private banks and institutions that compose GFANZ with multi-lateral development banks (MDBs) in order to capitalize on “a vast commercial opportunity” – i.e. using the existing model of MDBs to trigger market deregulation through debt slavery to facilitate the “green” investments of GFANZ members, all under the guise of furthering “sustainable development,” “multipolarity” and “inclusion.” GFANZ’s ambitions also include the creation of global carbon markets as part of its broader push to recreate “global financial governance” by “seizing the New Bretton Woods moment.”

Since 2021’s COP26, GFANZ and Larry Fink have both suffered public relations snafus related to public and political pushback against ESG investing. However, Fink’s recent comments on ETFs and tokenization, as well as his dramatic change in opinion on Bitcoin, show that powerful figures like Fink are still determined to remake the global financial system, but are seeking to frame their ambitions differently to avoid pushback from anti-ESG campaigners and influencers.

Instead of framing their plans for a new global financial system as a “planetary imperative” aligned with Net Zero initiatives and other ESG-related indicators, Fink’s recent rhetoric indicates a desire to frame the new system in ways that will be better received by the political right – as a way to reduce crime and corruption and as the key to next generation wealth and finance. Despite this drastically different framing, the ambitions of Fink and his allies as it relates to creating a new global financial system still rest tremendously on climate finance and the tokenization of natural assets.

For instance, Fink’s and GFANZ’s calls to “reimagine” the IMF and World Bank are rapidly being realized, with these institutions being retooled to better impose new products and paradigms on developing countries. For instance, last November, the IMF and World Bank joined with the Bank of International Settlements (BIS) and Switzerland’s central bank to collaborate on tokenizing “some of the financial instruments that underpin their global work,” specifically promissory notes. Per the press release on the collaboration, officially known as Project Promissa, the effort is tied to simplifying “the process for making development money available for emerging and developing economies” (the target markets of GFANZ) as well as the implementation of central and commercial bank-issued programmable money, such as CBDCs. One BIS official quoted in the press release commented that the tokenization process allowed for “encoding policy and regulatory requirements” into a “common protocol” to tackle money laundering and illicit activity – an apparent hat-tip to built-in KYC/Digital ID functionality.

The World Bank in particular has been exploring tokenization extensively for the purpose of creating “a modular and interoperable end-to-end digital ecosystem for the carbon market.” Through its Digital for Climate (D4C) working group, the World Bank and its partners – including the UNDP and the European Space Agency – seek to build “the next generation of climate markets.” D4C hopes to accomplish this specifically by directing countries to create National Carbon Registries based off of models produced by the UNDP and World Bank that rely on blockchain technology. The data produced by these registries will be “link[ed], aggregat[ed] and harmoniz[ed]” by D4C’s metadata layer, the Climate Action Data Trust – co-founded by the World Bank and Google’s philanthropic arm, among others.

Key to this digital ecosystem is D4C’s tokenization engine, which would facilitate transactions by allowing an “original issuing authority” to issue tokens that receive the “environmental attributes” of carbon credits that would be traded on-chain. D4C utilizes the “green” Chia blockchain, developed by BitTorrent inventor Bram Cohen. Part of the D4C’s “Climate Tokenization Suite” includes a Climate Wallet, currently an extension of Chia Wallet, for trading carbon credit tokens. It requires an active connection to a Climate Action Data Trust node to function.

As reported last year by Unlimited Hangout, the World Bank has been busy developing the global interoperable Digital ID database via its ID4D project. The World Bank’s D4C program similarly aims to produce global interoperable registries and digital infrastructure for global, tokenized carbon markets, markets that will invariably include Digital ID functionality, ostensibly to reduce “double counting” of carbon and illicit financial activity. As noted by Fink in his statements on mass tokenization, there will eventually be “one ledger” where everyone and every asset has their own number. For now, it seems, this one ledger is taking shape through the “decentralized” and interoperable databases and other infrastructure being set up by the “reimagined” World Bank. The World Bank announced plans in December to launch carbon markets in 15 countries – all of which are in the “Global South” – beginning this year. Based on the press release, these countries will be utilizing the “cutting edge technology” and standards the World Bank has developed through D4C and related initiatives.

While the World Bank is seemingly leading the charge on carbon credit tokenization and the infrastructure necessary to trade it, offerings from the private sector will likely be built to be interoperable with each other as well as the infrastructure produced by initiatives like the World Bank’s D4C. For instance, Ripple, which recently pledged $100 million to “ramp up” global carbon markets, was one of the blockchain networks used in the World Bank’s research on the Interledger protocol, research which the World Bank referred to as “very promising.” Ripple’s remittance product was previously endorsed by the World Bank and Ripple co-founder, Chris Larsen, was previously an advisor to the IMF on blockchain technologies.

Another private sector player in the emerging, global tokenized carbon market is Flowcarbon, backed by Adam Neumann, the disgraced founder of WeWork now best known for mismanagement and fraud. The company plans to “accelerate decarbonization through the tokenization of carbon credits and maintaining a record of the transactions on the blockchain.” Reuters has described Flowcarbon as a “blockchain-enabled carbon credit trading platform” that has raised millions via an ICO of the company’s “Goddess Nature” token, which is “backed by a parcel of certified carbon credits from nature-based projects.” Flowcarbon’s tokenized carbon credits are integrated in the Gold Standard registry, a carbon credit standards body and registry whose data will be collated and managed by the World Bank’s Climate Action Data Trust. Flowcarbon’s partnership with Gold Standard will allow Flowcarbon to “create high integrity tokens backed by Gold Standard’s credits,” per Flowcarbon’s CEO.

However, in keeping with Fink’s promise that everything will be tokenized, the efforts to tokenize nature have already gone far beyond carbon. For instance, The Latin America-focused branch of the multilateral development banking system, the Inter-American Development Bank, helped create, along with the Rockefeller Foundation, the Intrinsic Exchange Group (IEG), which is the entity behind Natural Asset Corporations (NACs). Per the IEG, NACs pioneer “a new asset class based on natural assets and the mechanism to convert them to financial capital.” These natural assets, the group states, “include biological systems that provide clean air, water, food, medicines, a stable climate, human health and societal potential.” NACs, once they lay claim to the natural asset they identify, launch an IPO and become the issuers of shares in that natural asset which are then sold to institutional and individual investors, corporations, sovereign wealth funds, etc., thereby fractionalizing the natural asset the NAC was created to capture. While the IEG has claimed that funds raised by NACs will aid conservation efforts, they admit elsewhere that NACs are designed to reap massive profits off of this massive new asset class based on the commodification and fractionalization of the natural world. Though the IEG’s partnership with the New York Stock Exchange seems to have fallen through to an extent (at least for now) due to political pushback, NAC pilots persist in Latin American nations such as Costa Rica.

Some companies have already moved to tokenize these natural assets to facilitate and accelerate their financialization and fractionalization. For example, the Estonia-based venture capital firm Single Earth “tokenizes land, forests, swamps and biodiversity: any area of rich ecological significance.” Companies (and eventually individuals, they promise) can then “purchase those tokens and own fractional amounts of those lands and natural resources, getting carbon offsets in return as well as ongoing ownership rights.” These tokenized forests and other natural assets serve to back Single Earth’s proprietary MERIT token, which has been framed by outlets like Forbes as “more legitimate” than both fiat currency and Bitcoin. The company’s goal is to “make nature the new gold” by monetizing it “for just being there,” creating a “fascinating combination of environmental impact and financial profit.”

Some national governments have already made plans to tokenize their land and natural assets, namely the Central African Republic. One of Africa’s most impoverished countries, the CAR has been working to tokenize its land and natural resources, including timber and diamond reserves, since 2022 and passed legislation last year to advance their efforts. The initiative hails from the country’s digital currency hub known as the Sango project. In addition to the efforts to tokenize natural resources that have never before been part of the financial system, the push to tokenize the most well-known natural resource commodities, e.g. oil and gas, has also advanced considerably, with several companies having developed platforms for trading tokenized oil and gas reserves. Renewable energy sources are also increasingly a target for tokenization.

Other VCs, such as Union Square Ventures, have written about the mass tokenization of natural assets from a different perspective. Instead of the more common claims from groups like Single Earth that tokenizing nature will “save the planet,” Union Square Ventures sees tokenized natural assets as soon “form[ing] the basis of a new type of digital collateral” that could be used in “lending, insurance, stablecoins, and other on-chain financial products.” They suggest that “a new stablecoin could be backed primarily (or maybe entirely) by natural assets.” Proposals for such stablecoins have been made before, such as proposals for an IMF-issued Climate Coin. That proposal called for the coin’s collateral pool to be composed of “a majority reserve of sustainable assets, eventually reaching 55% of land and forests, 25% in renewable energy initiatives, 15% in the top 500 most compliant ESG companies, and 5% in biotech research initiatives.”

In January of last year, one of Australia’s largest banks, National Australia Bank, announced its plans for a “green” stablecoin in partnership with an agritech company called Geora. The stablecoin, characterized by the bank as a tokenized deposit, is poised to be used in “carbon credit trading activities” and will utilize blockchain to verify “green” assets that back the stablecoin. The ambitions of the partnership are apparently larger than just their “green” stablecoin. For instance, the bank’s partner in this endeavor, Geora, “envisages a future where tokenized agricultural products, agri-assets [i.e. land holdings, prospective harvests, etc.], are used as loan collateral” while the bank plans to use blockchain to “track that borrowers comply with the green covenants of” their “Agri Green loan” offerings.

Geora’s vision for the future is, in fact, already here. A Visa-backed company known as Agrotoken describes itself as the “first global tokenization infrastructure for agrocommodities” and offers stablecoins tied to grains grown in Argentina and Brazil. Urging farmers to “tokenize your grains and pay anything you want,” farmers can then exchange their “agrotokens” for “seeds, vehicles, machinery, fuel, services” and even “use them as collateral for loans.”

Already existing stablecoins, such as Celo’s dollar and euro stablecoins, have already invested a considerable portion of their reserves in tokenized natural assets, such as rainforests. The Celo network is also partnered with the aforementioned company FlowCarbon in order to “create the first liquid market for live carbon credits on-chain that is designed to make carbon offsetting widely accessible and transparent.” Celo also recently announced a partnership with Circle whereby Circle’s USDC stablecoin will launch natively on Celo and is poised to become the network’s gas currency. Celo, backed by Jack Dorsey’s Block, Reid Hoffman, Coinbase Ventures and Andreessen Horowitz, among others, has been open about its ambitions to become one of the main blockchains for tokenized real world assets, particularly tokenized natural assets. For instance, Celo co-founder Rene Reinsberg remarked the following after the Flowcarbon partnership was announced: “From the start, we designed Celo to bring natural assets on-chain in a meaningful way to enable a regenerative financial system.”

The Tokenized World

“We believe we’re just halfway there in the ETF revolution…Everything is going to be ETF’d…We believe this is just the beginning. ETFs are step one in the technological revolution in the financial markets. Step two is going to be the tokenization of every financial asset.”

– Larry Fink, 1/12/2024 on Bloomberg Television

During a January 17, 2024 panel at the World Economic Forum conference in Davos, Jeremy Allaire, CEO of the USDC stablecoin issuer and BlackRock affiliate Circle, made note of Fink’s comments on tokenization from a few days prior on Bloomberg. “It suggests confidence that tokenization is going to be coming on in a significant way. That we’re going to see some of the very biggest asset issuers in the world issuing tokenized versions of those assets this year. That’s significant.”

The stated significance of the tokenized issuance of assets, whether via blockchain technology, such as Circle’s dollar instrument USDC, or even the traditional ETF model, such as within the creation of iShares’ IBIT, cannot be understated in the influence of pricing within the commodity market. In fact, within the IBIT S-1 filing listed risk factors, it clearly states that “Prices of bitcoin may be affected due to stablecoins (including Tether and USDC), the activities of stablecoin issuers and their regulatory treatment.” Further in the S-1 is the mention that an affiliate of the Sponsor “has a minority equity interest in the issuer of USDC” and “acts as investment manager to a money market fund, the Circle Reserve Fund” of which Circle uses to “hold cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury, and repurchase agreements secured by such obligations or cash”, all of which “serve as reserves backing USDC stablecoins.”

In Spring of 2022, Circle announced a $400 million funding round led by BlackRock, which included a “strategic partnership” to be the “primary asset manager of USDC cash reserves and explore capital market applications for its stablecoin, among other objectives.” Allaire told TechCrunch at the time that “Our broader strategic partnership with BlackRock, announced today, will allow us to explore new use cases where USDC may be an efficient resource in the financial services value chain.” According to the Circle Reserve Fund product website on BlackRock’s website, the fund is sized at $23.6 billion dollars, including double-digit percentage investments from Citigroup (13.45%), Royal Bank of Canada (11.59%), Goldman Sachs (10.41%), and Wells Fargo (10.35%).

In an article Allaire penned for the WEF just two days before the 2024 panel at Davos titled “Blockchain is in from the cold — and stablecoins are set to change the financial system forever,” the Circle CEO made mention of the increasing interest in stablecoins, tokenization and blockchains by legacy banking institutions as illustrated by BlackRock’s Circle Reserve Fund. “This growing embrace of blockchain is reflected in the strong interest among traditional financial firms. In just the last few months, BlackRock, J.P. Morgan, Standard Chartered, HSBC, Goldman Sachs and other major financial institutions have all announced projects that deepen their involvement with blockchain.”

Fink, in a previous mentioned interview with CNBC stated: “I think we’re going to create digital currencies, we’re going to use technology for it. We’re going to use a blockchain.” Allaire went on to further push stablecoins’ importance as “the critical element that underpin[s] this new internet financial system,” making a prediction that “Trillions of dollars of real economic activity could take place on the internet financial system in the next few years.”

In September 2023, Deutsche Bank, of which BlackRock holds over 6.3% of voting rights, announced a partnership with Taurus, which received regulatory approval from Switzerland’s Financial Market Supervisory Authority (FINMA) to offer tokenized securities to retail clients in January 2024. This is notable in that retail users can now access accounts within the regulated securities market to purchase digital assets and tokenized securities. “Our core belief at Taurus is that private markets 2.0 shall be digitized, so that buying a private security becomes as easy as buying a book on Amazon,” Head of Product Yann Isola said. “The growing demand for real-world asset tokenization, the fastest growing market segment in the digital asset space, validates this belief.”

This is hardly a position held solely by Isola or Allaire, as the Boston Consulting Group (BCG), WEF, BNY Mellon, and Citigroup are all making bold predictions for vast increases in the market share of tokenized assets. According to BCG, in less than ten years, asset tokenization will exceed $16 trillion and account for 10% of global GDP. The WEF, however, stated that this 10% will not take until 2030, but rather by 2027. BNY Mellon, the custodian of Circle’s USDC reserves, says that “Since tokenization leverages smart contracts, it could manage both the financial investment as well as facilitate the voting and/or ownership rights associated with the investment,” taking us from a shareholder capitalism model to “incorporating a stakeholder capitalism model.” BNY Mellon succinctly explains the advantages of the tokenized model, concluding with the premise that through tokenization, all assets can be fractionalized:

“Tokenization of assets involves the process of digitally representing real, physical assets on distributed ledgers, or issuing traditional asset classes in tokenized form. Within the context of blockchain technology, tokenization is the process of converting something of value into a digital token that’s usable on a blockchain application and a token represents a share of ownership in the underlying asset. This process can work for tangible assets like gold, real estate, debt, bonds, and art, or certain forms of intangible assets such as ownership rights or content licensing. What is even more exciting is that tokenization allows for transforming ownerships such that traditionally indivisible assets can be fractionalized into token forms.”

The investment bank Citi took a similar approach to their thesis on the tokenization, claiming an “80-fold increase from the current value of real-world assets locked on blockchains” by the end of the decade. Citi noted in their “Money, Tokens and Games” March 2023 report that they “forecast $4 trillion to $5 trillion of tokenized digital securities and $1 trillion of distributed ledger technology (DLT)-based trade finance volumes by 2030.” Citi claims the “private/unlisted market is more suitable for blockchain adoption,” citing the “resulting liquidity, transparency, and fractionalization,” whereas for public securities, tokenization provides advantages “such as efficiency, collateral use, golden sources of data, and ESG tracking.” The report again mentions fractionalization within a section titled “Traditional Securities Tokenization,” claiming “the use of DLT to record transfer of securities can improve the efficiency of existing processes as paperwork and manual processes are eliminated… allowing for fractionalization and use as collateral.”

Citi goes on to articulate that “once this intermediate, skeuomorphic ‘straddle’ state is crossed,” tokenization of RWAs via blockchain “breaks [us] free from the old and ideally directionally trends towards the envisioned end-state.” The mentioned end-state is further described as “digitally native financial asset infrastructure, globally accessible, operating 24x7x365 and optimized with smart contract and DLT-enabled automation capabilities, which enable use cases impractical with traditional infrastructure.”

One day after the approval of the Bitcoin Spot ETFs, on January 12, 2024, BlackRock announced the acquisition of one of the largest infrastructure fund managers in the world, Global Infrastructure Partners (GIP). The agreement was made with a package consisting of $3 billion in cash and around 12 million shares of BlackRock stock, totaling around $12.5 billion. Within the announcement, a quote attributed to Fink expressed his belief in the long-term financial implications of the modernization via the digitization and tokenization of the infrastructure sector:

“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy. We believe the expansion of both physical and digital infrastructure will continue to accelerate, as governments prioritize self-sufficiency and security through increased domestic industrial capacity, energy independence, and on-shoring or near-shoring of critical sectors. Policymakers are only just beginning to implement once-in-a- generation financial incentives for new infrastructure technologies and projects.”

In a conversation with Andrew Sorkin on CNBC that same day, Fink was clear in his assessment that “the future in private markets will be infrastructure,” and his company’s partnership with GIP doubled BlackRock’s $50 billion in infrastructure AUM by adding over $100 billion in client assets across “infrastructure equity and debt.” Among GIP’s notable investments are international airports such as Gatwick, Edinburgh, and Sydney, the CyrusOne data center, “Suez (water and waste), Pacific National and Italo (rail), Peel Ports and Port of Melbourne,” among a handful of leading renewable energy platforms such as “Clearway, Vena, Atlas, and Eolian.” BlackRock also appointed Adebayo Ogunlesi, GIP Chair and CEO, to its board, following the finalization of the acquisition. On CNBC, Fink further articulated his reasoning for the merger with a tell-all explanation of the future of infrastructure merging with the private market:

“I have been long advocating that deficits matter. The future of governments funding their deficits on their own balance sheets is going to become more and more difficult. We’re in a conversation with many governments of doing more public-private transactions. We are seeing more and more corporations, instead of selling divisions, they are selling blocks of assets. Sometimes 100% and sometimes 50% and going into partnership and building the infrastructure. We all know the need of re-calibrating our power grid as we digitize everything. We all know that more and more countries are focusing on energy independence and some of them are focused on decarbonization. All across these investments, we are talking trillions of dollars. We believe the big macro trend in the future is going to be much heavier reliance on private capital – retirement assets –– to co-invest with companies and governments with infrastructure. [emphasis added]”

The idea of BlackRock perpetuating the trend of private sector investment in infrastructure via pension funds is hardly a recent development. In an interview with Business Insider in July 2021, directly after the passing of a $3.5 trillion infrastructure deal by the Biden administration, Alan Synnott, Global Head of Research and Product Strategy for BlackRock Real Assets commented, “Direct government spending on infrastructure is an important part of financing the maintenance of existing infrastructure and of developing new infrastructure. In addition, policies, tools and regulations can help catalyze opportunities for the private sector to participate.” Synnott later added, “the growth of infrastructure investment by pensions in the US is happening anyway.”

GIP’s Ogunlesi, a former partner at First Boston with Fink, was named the lead director on the board of directors at Goldman Sachs in July 2014, but will be stepping down from that role by the time of this deal’s closure. Notably, Ogunlesi was also a member of President Trump’s Strategic and Policy Forum alongside Fink. Other Forum members included Jamie Dimon; Paul Atkins, Former Commissioner of SEC; Bob Iger, CEO of Disney; Rich Lesser, CEO of Boston Consulting Group; Doug McMillon, CEO of Wal-Mart; Jim McNerney, CEO of Boeing; Ginni Rometty, CEO of IBM; Kevin Warsh, Former Member of the Board of Governors of the Federal Reserve System; and Mark Weinberger, CEO of EY.

The Forum was chaired by Stephen Schwarzman, the CEO and Founder of Blackstone, who, in exchange for a 50 percent stake in the business, initially gave Fink and the founding team of BlackRock the $5 million credit line that started the company in 1988.

The Universal Ledger

Fink, in his recent statements on the coming tokenization “revolution” also emphasized how this dramatic shift would be enabled by everything that will be tokenized, as well as those interacting with the tokenized economy, having a unique identifier and having every transaction tracked “on one general ledger.” He stated specifically that:

“We believe the next step going forward will be the tokenization of all assets and that means every stock and every bond will have its own, basically, CUSIP [i.e. the system used to identify most financial products in North America]. It will be on one general ledger. Every investor, you and I, will have our own number, our own identification. We can rid ourselves of all issues around illicit activities around bonds and stocks and digital by having tokenization…. We would have instantaneous settlement. Think of all the costs of settling bonds and stocks, but if you had a tokenization, everything would be immediate because it is just a line item. We believe this is a technology transformation for financial assets. [emphasis added]”

Fink’s statements are an apparent head-nod to the UN’s sustainable development goals (SDGs, sometimes referred to as Agenda 2030), which BlackRock has long supported, both in terms of public support and in terms of pressuring companies it influences to implement SDG policy goals and tracking their progress towards their implementation. SDG 16, in particular, contains provisions for biometric and interoperable Digital IDs to be developed by the private sector that all meet the technical standards laid out by the UN-backed ID2020 (now part of the Digital Impact Alliance). This is being done to provide the illusion of decentralization, when – in reality – these different ID systems will all be required to export data harvested from the Digital ID system to a global, interoperable database. That database is likely to be the World Bank’s ID4D.

UN documentation on the SDGs directly links Digital ID to the implementation of what it refers to as “financial inclusion.” Elsewhere, UN officials have described increasing financial inclusion as “imperative” to delivering the SDGs. As Unlimited Hangout previously reported:

The UN Task Force for the digital financing of SDGs explored how to “catalyse and recommend ways to harness digital financing to accelerate the financing of the Sustainable Development Goals.” It published a “call to action” with the objective of exploiting “digitalization in creating a citizen-centric financial system aligned to the SDGs.” The UN Task Force’s “action agenda” recommended “a new generation of global digital financing platforms with significant cross-border, spillover impacts.” According to the regime, this would, of course, require the strengthening of “inclusive international governance. Cross-border spillovers, or “externalities,” are the actions and events occurring in one country that have intended or unintended consequences in others. […] It is claimed that cross-border spillover could be managed by including “digital ID and data markets” in a system of “SDG-aligned digital financing.”

Another, related UN document, entitled “Peoples’ Money – Harnessing Digitilisation to Finance A Sustainable Future,” the UN describes how long-term financing for the SDGs and related infrastructure should come directly from the “peoples’ money,” i.e. regular people’s bank accounts, upon the implementation of “citizen-centric, SDG-aligned digital finance.” Essential pre-requisites for this system, the document states, “includes the core digital connectivity and payments infrastructure, Digital IDs, and data markets that enable financial innovation and low-cost service delivery. [. . .] Universally-available, reliable, secure, private, unique Digital IDs are critical to enabling people to access digital finance.” Other documents related to SDG implementation and “SDG-aligned digital finance” from entities like the Bank of International Settlements call for every business entity, from the largest to the smallest, to have “decentralized identifiers,” i.e. DIDs. In other documentation, the BIS, as well as the UN, have treated CBDCs and Digital IDs, including DIDs, as synonymous and essential to achieving the so-called “financial inclusion” agenda. Transactions of different yet interoperable CBDCs, and their private sector equivalents, are poised to be tracked on a single, global ledger, not unlike Digital ID. In fact, it appears it is all meant to be stored on the same ledger.

As stated in 2018 by Peggy Johnson, then a top executive at Microsoft, a ID2020 co-founder:

As discussions begin this week at the World Economic Forum, creating universal access to identity is an issue at the top of Microsoft’s agenda. [. . .] Last summer that Microsoft took a first step, collaborating [. . .] on a blockchain-based identity prototype [. . .] we pursued this work in support of the ID2020 Alliance — a global public-private partnership[.] [. . .] Microsoft, our partners in the ID2020 Alliance, and developers around the globe will collaborate on an open source, self-sovereign, blockchain-based identity system that allows people, products, apps and services to interoperate across blockchains, cloud providers and organizations. [. . .] We will also help establish standards that ensure this work is impactful and scalable. Our shared ambition with ID2020 is to start piloting this solution in the coming year to bring it to those who need it most, beginning with refugee populations.

These programs, from ID2020 and also from the UN’s World Food Programme, tie a person’s iris biometrics to a Digital ID that links directly to that person’s digital wallet, where aid money is disbursed, meaning that – if a refugee wants to eat – they must participate in a cashless, biometric-based financial system where financial transactions and key aspects of identity, including education credentials and health records, are stored. With the World Bank poised to serve as the database for much of this infrastructure once developed at scale via its ID4D initiative, it seems likely that the coming “SDG-aligned digital finance” and Digital ID system will also incorporate the World Bank’s aforementioned “climate wallet” functionality as developed through their D4C initiative. As noted earlier, this would enable large-scale engagement with tokenized carbon markets. One of Larry Fink’s reasons in calling for the “reimagining” of the World Bank was specifically to help “fund the [energy] transition in emerging markets,” which presumably involves facilitating carbon markets.

In previous years, Larry Fink was very vocal about ESG and pressuring the myriad of companies in which BlackRock is a significant shareholder to develop decarbonization policies. However, upon pushback – namely from the political “populist” right, Fink abandoned his faux-collectivist talking points to justify these policies and has since even dropped using the term ESG altogether. When this transition began, Fink argued that his push for ESG had been motivated by “the pursuit of long-term returns,” not by politics or ideology. He further described BlackRock’s approach to sustainability as being rooted in “stakeholder capitalism,” the economic system championed by the WEF’s Klaus Schwab and built on an interlocking, global network of public-private partnerships. In that same document, Fink called decarbonization, which includes voluntary carbon markets, “the greatest investment opportunity of our lifetime.” Fink has since altered his rhetoric around these agendas, moving from claims that they are necessary to avoid planetary doom, to claims that they are the key to unlocking next generational wealth.

Tokenized Dialectics

Last week, the “anarcho-capitalist” leader of Argentina, Javier Milei, met with Larry Fink to discuss new, potential investment opportunities for BlackRock in Argentina, with a focus on infrastructure. Milei came to power campaigning against the existing Argentine establishment and those that have depleted the once-rich nation and plunged it into near economic ruin. This makes his decision to meet with Fink all the more odd, given BlackRock’s critical role as one of the “vulture capitalist” entities that have sought to become the owners of Argentina’s resources and assets following its debt enslavement by the IMF and other financial institutions focused on “development.” Fink is not the first such figure to be courted by Milei following his electoral victory and he has stuffed his cabinet with establishment figures from the previous Macri administration, even placing the same former

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