Bitcoin has experienced a notable decline in momentum this week after making a significant rebound toward the $100,000 mark, following a brief dip below $80,000 due to an unexpected warning from the Federal Reserve.
The price of bitcoin, which had reached a peak of over $126,000 in October, has continued its downward trend despite a surprising announcement from BlackRock’s CEO regarding a sovereign wealth fund’s involvement in bitcoin. In a bold prediction, Elon Musk has made headlines, while the chair of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, expressed his belief that the entire U.S. financial sector will transition to the blockchain technology that underpins bitcoin and other cryptocurrencies within the next two years.
Earlier this year, President Donald Trump appointed Paul Atkins, a known advocate for bitcoin and cryptocurrencies, as the SEC chair, which contributed to a surge in bitcoin’s price. Atkins emphasized during an interview with Fox Business that this shift could occur much sooner than anticipated, stating, “It’s the way the world will be [in] not just 10 years but maybe as little as two years.” He highlighted that advancements in digital assets and the tokenization of markets would bring substantial advantages in terms of transparency and risk management.
Tokenization refers to the process of converting assets, securities, and complicated financial products into blockchain-based tokens, a concept that has been heralded as potentially transformative for financial markets. Larry Fink, CEO of BlackRock, the world’s largest asset management firm, voiced strong support for this technology in 2023, suggesting that its growth could mirror that of the internet. He remarked, “Tokenisation could advance at the pace of the internet—faster than most expect, with enormous growth over the coming decades,” comparing the current state of tokenization to the early days of the internet in 1996 when Amazon was just beginning to sell books online.
The price of bitcoin has seen a sharp decline since its October peak, raising concerns about the potential for a crash. BlackRock’s initiative to launch a spot bitcoin exchange-traded fund (ETF) on Wall Street was described by Fink as a pivotal move toward a tokenized financial landscape, with the aim of making finance more accessible.
Research from crypto asset manager Hashdex indicated that the momentum for tokenization is already underway, noting significant growth in the market for tokenized Treasury bills, which have surged from just over $700 million to more than $8 billion in circulation on public blockchains within two years. They projected that the tokenized assets market could reach nearly $400 billion by the end of 2026, representing a remarkable increase from its current $36 billion valuation.
In a significant development, Atkins recently announced the SEC’s “innovation exemption” for crypto issuers, set to be implemented in January. This new framework will allow crypto-related financial instruments to enter the market without undergoing the full registration process mandated by the SEC. This marks a departure from the previous administration’s stringent stance on cryptocurrencies, signaling a more accommodating approach under Atkins’ leadership. He remarked, “It’s a new day and we want to embrace this new technology.”
