BlackRock CEO issues annual open letter: The wave of tokenization has arrived, and we will lead this trend

Written by: Larry Fink, BlackRock

Compiled by: AididiaoJP, Foresight News

Every year, I write this letter to distill the essence of my communications over the past year with clients, employees, leaders around the world, CEOs, and investors saving for retirement. Recently, no matter who I talk to, I hear the same sentiment: we are uncertain about how to respond to the current situation.

This feeling is understandable. We are experiencing a unique period—events that once defined entire decades are now commonplace: wars affecting the globe, companies with trillion-dollar valuations, a fundamental reshaping of international trade patterns, and perhaps the most disruptive technological innovations since the advent of computers.

Unfortunately, people often interpret these phenomena through a short-term lens. Daily market fluctuations are seen as harbingers of long-term trends, and complex economic or technological transformations are condensed into sensational news headlines. We live in a world where information is transmitted instantaneously and reactions are equally swift. At times, it feels like a dopamine-driven environment—an endless stream of information stimulates people's short-term impulses. However, speed can easily distort perspective, pushing long-term thinking aside.

Fairly speaking, short-term behavior in financial markets has its value. It is a necessary mechanism for absorbing new information, pricing risk, and allocating capital.

However, in the long run, maintaining an investment posture is far more important than precisely timing market entries and exits. Over the past twenty years, every dollar invested in the S&P 500 has grown more than eightfold. If you missed the ten best trading days, your returns would be less than half of that¹. Moreover, some of the strongest market rallies occur precisely during the most tumultuous news headlines.

The risk is that we focus too much on the noise and forget the fundamentals that truly matter. The forces behind today's headlines have been building for a long time. The old model of global capitalism is breaking down. Countries are spending heavily to seek autonomy in critical areas such as energy, defense, and technology.

Meanwhile, the vast majority of wealth is flowing to asset owners rather than to those who primarily rely on labor for income. Since 1989, the appreciation of a dollar invested in the U.S. stock market has been more than 15 times that of a dollar tied to median wages². Today, artificial intelligence may replicate this pattern on an unprecedented scale—concentrating wealth in the hands of companies and investors with first-mover advantages.

This is the main source of current economic anxiety: a deep-seated feeling that capitalism is functioning but failing to benefit the broader population. Focusing on short-term investments will not solve this problem. On the contrary, only long-term investments can help nations build domestic industries, assist individuals in accumulating lasting wealth, and demonstrate how the fruits of national development can also benefit them.

Ideal long-term investments can create a miracle akin to a social contract. When people save and invest with decades in mind rather than days, capital markets can effectively allocate these funds to finance businesses, infrastructure, and jobs. When this cycle occurs domestically, individual futures become tightly intertwined with the nation's future. You provide financial support for national development, and national development, in turn, contributes to your wealth growth.

My belief in this civic miracle is undoubtedly influenced by my professional background. But I am not speaking solely as the CEO of BlackRock—this belief is rooted in my decades of personal experience witnessing how investments help more people share in the fruits of economic growth.

This belief also stems from my family's experiences. My father was born in 1925, and my mother in 1930; they came from humble beginnings. My father ran a shoe store, and my mother taught English. Yet they lived within their means, committed to saving and investing.

That was during the 1950s and 1960s, a time when the U.S. interstate highway system was being built, the industrial boom of the mid-century was thriving, and the automotive industry was reshaping the way people lived. They participated in and supported all of this in their small way. They were part of the modern American capital flow. Over time, the fruits of growth also returned to them. By the time they retired, their savings were sufficient to allow them to enjoy a comfortable life well into their nineties. Their wealth growth was always aligned with the expansion of the American economy.

This phenomenon is far from unique to the United States. Across different countries and generations, the patterns are remarkably similar. Families that invested broadly and consistently, enduring the Great Depression and wars, inflation and financial crises, and even the global pandemic, had opportunities for their wealth to grow in sync with their national economies. It is this history that keeps me perpetually optimistic about the long term. Not because the road ahead is smooth, but because markets tend to reward those who maintain their investments amid uncertainty.

This is the challenge of our time: to expand opportunities and ensure that more people can have a stake in national development. Because today, too many are left out.

Many people first lack the funds to invest—those families living paycheck to paycheck. If you can barely manage next month's rent, next week's groceries, or unexpected bills, investing is out of the question. Therefore, the starting point should be to help people build a basic financial safety net.

Progress is already being made in this area. Emergency savings accounts that allow employer matching contributions and permit workers to withdraw without penalties are becoming increasingly common. More and more countries are trying to establish investment accounts that start at birth, giving children a stake in their nation's future development as soon as they leave the hospital.

Even with savings, market participation remains limited. The U.S. may have the highest market participation rate in the world, but still, about 40% of the population has not engaged with capital markets³. Globally, participation rates are far lower⁴. Billions of people are like spectators, watching their national economies grow but only able to deposit their savings in low-interest bank accounts rather than sharing in the development through investments.

The foundation of a well-functioning market is investor trust that they can trade at fair prices. This trust helps companies raise the capital they need for growth and allows families to diversify their investments at low costs rather than relying solely on a single property. Expanding the reach of this system through technological advancements and financial literacy can enable more people to share in economic growth. Over time, the same technological advancements will also help bring greater transparency to certain areas of private markets—such as infrastructure and private credit—and potentially open doors that were previously out of reach for most individual investors.

Half of the global population carries digital wallets on their phones⁵. Imagine if the same digital wallet could also allow you to invest in a diversified portfolio of stocks as easily as sending a payment. Tokenization technology can accelerate this vision by upgrading the underlying architecture of financial systems—making the issuance, trading, and access to investments simpler.

I began this letter with several forces that make the current discussion particularly urgent: the restructuring of global trade patterns, the rising inequality exacerbated over the past generation, and the risk that without broad market participation, artificial intelligence may further widen the gap.

Next, I will illustrate how four countries are taking steps to expand market participation and help their citizens grow alongside their national economies—there are countless examples of this.

The final part of the letter will turn to how BlackRock is working with clients to advance these goals.

Why Growing Together with the Nation Has Never Been More Important

First, the world is being restructured around "self-sufficiency," which requires more long-term investment.

Wherever I go, I hear similar sentiments. Europe is striving to develop a self-sufficient defense industry, emerging markets are focusing on developing domestic energy, and the U.S. is attempting to rebuild its manufacturing base. While the details differ, the trend is clear: countries are increasing investments to reduce interdependence.

There are reasons behind these moves. For many governments, accepting higher costs in pursuit of self-sufficiency is seen as an investment in resilience and long-term competitiveness—strengthening domestic industrial capabilities, anchoring jobs and investments at home, and enhancing control over critical sectors.

However, this transformation comes at a high cost. The costs of obtaining critical minerals like rare earths outside of China and building chip manufacturing facilities outside of Taiwan have risen significantly. Every step toward self-sufficiency means at least temporarily giving up the global economies of scale that have maintained low costs for decades. In short: self-sufficiency is expensive in the short term.

So, where will the funding come from? Historically, financing for major economic transformations has come from banks, corporations, and governments—not capital markets, which makes sense. That is where people deposit their funds. They put their savings in bank accounts, drive business growth by purchasing goods and services, and pay taxes to support public investment.

But these channels are now stretched thin; banks alone cannot meet all the demands of growing economies. Governments are burdened with record debt, and even Gulf economies with substantial sovereign wealth cannot achieve their grand ambitions solely through public funding. When the "Big Seven" tech companies build data centers or power infrastructure, they too need to turn to capital markets⁶.

The funding required for self-sufficiency is increasingly reliant on the market. It naturally makes sense to ensure that a larger proportion comes from domestic investors.

For decades, capital has chased returns globally—while local populations have often not benefited sufficiently. Funds should continue to flow freely to where opportunities exist; this is key to the effective functioning of markets. But that does not mean countries cannot take more measures to guide capital to serve their own development.

Abundance and Affordability of Energy

For years, I have advocated for "energy pragmatism." Meeting the growing demand requires expanding the supply of various energy sources, including oil, natural gas, renewable energy, storage, nuclear power, and the grid; no single energy source can solve all problems.

However, in the U.S., one thing is becoming increasingly hard to ignore: to keep household energy affordable, we must rapidly increase electricity supply.

Electricity demand has surged again after years of relative stability⁷. Households are becoming more electrified, industries are expanding, and data centers require large amounts of stable power. Meanwhile, new generation and transmission capacity takes years to develop. When supply grows slowly while demand accelerates, price increases become inevitable.

Natural gas remains crucial for ensuring the reliability of the power system, and the U.S. has abundant natural gas resources⁸. However, relying solely on natural gas is unlikely to meet the anticipated growth in electricity demand across regions. Therefore, a broader expansion of the power supply structure is necessary. Nuclear energy is vital in the long term, but building new capacity takes time, further underscoring the urgency of developing other energy sources now.

Solar energy is likely to play an important role in this expansion process. It is one of the fastest-deployed new power sources, and its costs have significantly decreased over the past decade⁹. Solar energy is not a substitute for other energy sources but rather an effective complement. Coupled with battery storage and grid upgrades, solar energy can help increase total power supply and alleviate price pressures over time.

Supply chains are critical. Currently, most of the global manufacturing capacity for solar cells and batteries is concentrated in China¹⁰. Based on resilience and security considerations, the U.S. and its partner countries are investing to diversify production and expand domestic manufacturing. While promoting solar energy in the U.S., it is essential to simultaneously build a stronger and more diverse supply chain foundation, including battery manufacturing and its critical minerals and components, which are increasingly vital for energy security and industrial competitiveness.

The principle is simple and clear: energy affordability depends on energy abundance. When electricity is in short supply, households feel the pressure first—reflected in monthly bills and overall living costs. When supply can reliably grow, the economy can develop, and households benefit accordingly.

The goal is not to favor any particular technology but to ensure that the U.S. can produce sufficient reliable and cost-effective electricity while supporting household budgets and long-term competitiveness. This requires speed, scale, and sustained investment in various energy sources—including meaningful expansion of solar energy.

Second, expanding investment participation can help address the wealth inequality left by the previous era of global capitalism.

Since the fall of the Berlin Wall, the wealth created in the world has surpassed the total in all of human history¹¹. More than a billion people in developing economies have escaped extreme poverty and entered the middle class¹². Companies in developed countries have gained access to vast new markets, and consumers have enjoyed cheaper goods. However, in wealthy countries, the fruits of growth have concentrated in the hands of a few.

There are many economic writings explaining the causes of this phenomenon. But the simplest, and perhaps least mentioned, explanation is that the vast majority of wealth has flowed into capital markets, while too few have participated.

For many families, wealth accumulation primarily relies on a single asset. Purchasing property has been, and still is, the main way for middle-class families to accumulate wealth.

However, housing is not necessarily a high-return investment. Considering property taxes, insurance, maintenance, and transaction costs—these expenses have significantly increased in many areas—long-term returns may be more moderate than nominal price increases and more volatile.

This is not a phenomenon unique to the U.S. In many developed economies, rising housing costs and tightening lending conditions have made home buying increasingly difficult, especially for young people.

Housing provides stable shelter, a sense of community belonging, and a forced savings mechanism—its benefits far exceed economic returns. However, if we expect more people to share in economic growth, we cannot rely solely on a single asset that is increasingly purchased later in life¹³.

It is easy to empathize with this predicament. If you no longer believe that work is the path to success, if you feel powerless to buy a home, or even if you can buy a home but struggle to accumulate substantial wealth, then the economy is unlikely to feel like it is serving you. If this sentiment is widespread among the populace, no country can thrive.

Many proposals have been made to address this issue. But if wealth is increasingly created in capital markets, then part of the solution lies in ensuring that more people can participate.

This is not to downplay the real challenges of housing affordability, nor to deny that many families' incomes have not kept pace with the growth in asset values. It simply means that a key part of the solution is to enable more people to enter capital markets—allowing them to share in the growth that is happening rather than merely observing from the sidelines.

If wealth is increasingly created in capital markets, then part of the solution lies in ensuring that more people can participate.

Third, if ownership does not expand accordingly, there is indeed a risk that artificial intelligence will exacerbate wealth inequality.

When discussing the economic impact of artificial intelligence, the focus often centers on employment. This is undoubtedly an extremely important issue, with implications that extend far beyond the economic realm. Work provides income, purpose, and dignity.

However, history shows that transformative technologies can create immense value—and most of that value accrues to the companies that build and deploy the technology, as well as to the investors who hold their shares.

The economy is rewarding scale to an unprecedented degree. In many industries, we are witnessing increasingly divergent "K-shaped" outcomes: leading companies are far ahead, while others struggle to catch up. The contrast is stark: Walmart's market value has reached an all-time high, while Saks Fifth Avenue filed for bankruptcy just two weeks ago¹⁴.

Artificial intelligence may further accelerate this trend. Companies that have the data, infrastructure, and capital to deploy AI at scale will capture a disproportionate share of the gains. This is neither unusual nor an inherent flaw. Market leadership shifts with technological change; it has always been this way. The more core question is: who gets to share in these gains? When market values rise while ownership remains concentrated in a few hands, those left out will feel that prosperity is increasingly distant.

Artificial intelligence is an unstoppable trend. It is at the core of U.S.-China strategic competition. The U.S. clearly recognizes that maintaining leadership in AI is critical, which requires sustained investment—covering research, infrastructure, talent, and capital markets that can finance large-scale innovation.

Artificial intelligence is also reshaping the investment industry itself. Even before generative AI entered the public consciousness, advancements in data science and computation were changing how investors analyze markets, manage risks, and allocate capital. One of the outcomes has been the rise of "systematic investing"—an approach that leverages vast amounts of data, research-driven models, and rigorous processes to assess thousands of securities at scale and consistently, rather than relying solely on individual judgment.

BlackRock has been building these capabilities for forty years: expanding data, refining models, applying technology to identify patterns and manage risks, to help clients achieve better long-term outcomes. As these tools become increasingly powerful, we believe that the combination of systematic insights and human expertise will define the next era of investing.

One thing is certain: artificial intelligence will create tremendous economic value. Ensuring that more people can share in this growth is both a challenge and an opportunity.

A Few Thoughts on AI and the Workforce

Historically, automation has enhanced productivity and expanded the scope of work over time—even as it has displaced some jobs. Artificial intelligence may do the same. But the emergence of new jobs takes time, and workers do not always transition smoothly.

There is no consensus on the impact of AI on the labor market—especially on entry-level white-collar jobs. The fact is, no one can predict with certainty.

In the short term, certain jobs are in high demand and offer lucrative pay: skilled trades, particularly those involved in building AI's physical infrastructure, such as data centers, power systems, and the grid. In the U.S., the employment growth rate for electricians is three times the national average¹⁵.

These jobs pay well above the median wage, with many reaching six figures. This is true across many Western economies¹⁶.

As NVIDIA's President and CEO Jensen Huang told me: "Everyone should be able to have a decent life. This does not require a Ph.D. in computer science."

The question is how to get more people into these jobs. The skills gap is real, and there needs to be sustained investment in training and apprenticeship programs. This is precisely why the BlackRock Foundation launched the "Future Builders" initiative—a $100 million philanthropic program aimed at expanding economic opportunities and supporting the next generation of skilled workers in the U.S., with plans to benefit 50,000 workers over the next five years.

But the issue goes beyond training. For decades, many societies have equated success with a college degree and white-collar jobs. As technology reshapes parts of the job landscape, we need to have a broader conversation about opportunity, dignity, and the value of different types of work. How do we respond?

This is a discussion worth having.

The employment growth for skilled trades in the U.S. is projected at 5%, higher than the national average of 3% (employment growth projected for 2024-2034).

Chart source: U.S. Bureau of Labor Statistics Occupational Outlook Handbook; BlackRock, 2026. Data last updated by the U.S. Bureau of Labor Statistics in August 2025. The national average includes all wage and salary workers, self-employed individuals, and workers in agriculture and private households. Military occupations are excluded.

Growing Together with the Nation—Examples in Practice

United States

People often wish to invest in their country's financial markets but lack the funds. A BlackRock survey found that one-third of Americans cannot come up with $500 for emergency expenses like car repairs¹⁷. In fact, many are forced to withdraw from the market to make ends meet. Last year, a record number of employees withdrew funds from their 401(k) accounts to address financial emergencies¹⁸.

The challenge is to first have savings available for investment. This starts with emergency savings accounts. Such accounts offer tax benefits for unexpected needs. BlackRock research shows that employees with emergency savings are over 70% more likely to contribute to retirement plans¹⁹. The U.S. has implemented policies to encourage this. Currently, employees can save up to $2,500 (adjusted for inflation) in emergency accounts linked to retirement plans, with employer matching contributions and penalty-free withdrawals.

Another way to get more people involved in investing is through "early wealth accumulation accounts." These are investment accounts set up for children at birth. Countries like Canada, the UK, and Singapore have attempted to implement this, typically with initial funding from the government. A wealth of evidence shows that such investments yield good returns: on average, individuals with early wealth accumulation accounts are more likely to attain higher education, start their own businesses, and own homes²¹.

Today, the U.S. is adopting similar policies through "Trump Accounts." The funding sources for these accounts vary. In some cases, they are government-funded pilot projects that require subsequent approval for extension. Funds may also come from individual contributions or through certain employer matching programs, like the ones we offer at BlackRock for our employees. In other cases, funding comes from private donors.

How these accounts will evolve remains to be seen. However, if designed thoughtfully and effectively integrated with existing education and retirement savings tools (like 529 plans and 401(k) plans), this could be an important step in helping more young Americans grow alongside their nation.

Additionally, there is a potentially powerful lever for wealth creation worth discussing—though it is not easy to talk about: the social security system.

Social security is one of the most effective poverty alleviation programs in history. According to data from the U.S. Census Bureau, it keeps nearly 29 million Americans out of poverty each year²². This is an extraordinary achievement.

The problem is that while social security provides stable support, it does not offer most Americans a way to accumulate wealth in a manner that allows them to grow alongside their nation.

Currently, the system primarily operates on a pay-as-you-go basis. Payroll taxes are used to pay benefits to current retirees, and the social security trust fund mainly invests in U.S. Treasury bonds. In effect, workers lend money to the government and receive defined benefits in return. This structure, as a social insurance program, emphasizes stability and predictability. What it fails to do is align people's benefits with overall economic growth. The question is whether the social security system can balance both? Can it invest some of its funds like other long-term pension plans—prudent, broadly, and across cycles—while still ensuring that the program remains a solid safety net?

This does not mean privatizing social security or investing it all in the stock market. Rather, it means introducing a degree of diversification, with principles similar to the Federal Employees Retirement System, which manages retirement savings for millions of federal employees. The goal is to enhance the sustainability of the system over time while maintaining core protections.

Several proposals have been made to this effect. For example, Senators Bill Cassidy (Republican - Louisiana) and Tim Kaine

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