Bitcoin may challenge the global status of the US dollar, tokenization leads the future of finance

On March 31, the CEO of a globally renowned asset management company released a 27-page annual letter to investors. In this letter, he rarely warned that if the United States cannot control the ever-expanding debt and fiscal deficit, the "global reserve currency status" enjoyed by the dollar for many years may ultimately give way to emerging digital assets such as Bitcoin.

Bitcoin May Undermine the Dollar's Reserve Currency Status

The CEO raised a thought-provoking question in the report: "Will Bitcoin undermine the dollar's status as the reserve currency?"

He pointed out that the United States has long benefited from the dollar's status as the global reserve currency. However, this advantage is not permanent. Since 1989, the growth rate of U.S. national debt has reached three times that of GDP. This year, interest payments alone will exceed $952 billion, surpassing defense spending. By 2030, mandatory government spending and debt repayments will exhaust all federal revenue, leading to long-term deficits.

While warning about the risks of traditional finance, this CEO also made it clear that he does not oppose the development of digital assets. He wrote: "It should be noted that I am clearly not opposed to digital assets. But two things can be true at the same time: decentralized finance is an extraordinary innovation. It makes the market faster, cheaper, and more transparent. However, it is precisely this innovation that could undermine the economic advantages of the United States—if investors start to believe that Bitcoin is safer than the dollar."

Reflecting on the performance, he mentioned that the Bitcoin ETF launched by the company in the United States has become the largest exchange-traded product debut in history, with assets under management exceeding $50 billion in less than a year. This product ranks third in asset attractiveness within the entire ETF industry, second only to the S&P 500 index fund. Notably, more than half of the demand comes from retail investors, and three-quarters comes from investors who have never held the company's products before. This year, the company has expanded its Bitcoin products to exchange-traded products (ETP) in Canada and Europe.

He further pointed out that ETFs have not only achieved great success in the United States but are also becoming a key tool in promoting the development of investment culture in Europe. Currently, only one-third of individual investors in Europe participate in capital market investments, a figure that is far below the over 60% in the United States. This not only causes them to miss out on the growth opportunities provided by the capital markets, but under the backdrop of low interest rates, their savings account returns are often eroded by inflation.

To improve this ratio, the company is collaborating with several mature institutions and emerging platforms in Europe to jointly lower investment thresholds and enhance local financial literacy.

Optimistic about RWA, believing that tokenization is the "highway" of the financial future.

From ETFs to the currently popular cryptocurrency technologies, this CEO believes that tokenization is becoming a key force in reshaping financial infrastructure.

He wrote that the circulation of global funds today still relies on the "financial pipelines" established in an era when voice trading in a trading hall and fax machines were considered revolutionary tools. Take the Society for Worldwide Interbank Financial Telecommunication (SWIFT) as an example – it supports global transactions worth trillions of dollars every day, and its operation resembles a relay race: banks pass instructions sequentially, with each step carefully verifying details. In the 1970s, when the market scale was smaller and transaction frequency lower, this relay method was reasonable. But today, continuing to rely on SWIFT is as inefficient as sending emails to the post office for forwarding.

Although this system was reasonable in the past, its efficiency is now difficult to support the financial demands of globalization and digitization.

In his view, the emergence of tokenization will completely change this inefficiency. If SWIFT is the postal service, then tokenization is the email itself—assets can flow directly and in real-time, bypassing all intermediaries.

The CEO further described how tokenization profoundly changes the financial ecosystem, undoubtedly reflecting a positive outlook on the RWA market. "It is the process of converting real-world assets (such as stocks, bonds, and real estate) into digital tokens that can be traded online. Each token represents your ownership of a specific asset, like a digital title deed. Unlike traditional paper certificates, these tokens are securely stored on the blockchain, making buying, selling, and transferring instantaneous, without the cumbersome paperwork and waiting times. Every stock, every bond, every fund - every type of asset can be tokenized. Once realized, it will completely revolutionize the way we invest. The market will no longer require a closing; transactions that used to take days can settle in seconds. The hundreds of billions of dollars currently frozen due to settlement delays will be able to be immediately reinjected into the economy, driving further growth."

He stated that perhaps most importantly, tokenization will make investment more "democratic." Tokenization can achieve democratization of access. Tokenization allows for fragmented ownership of assets—assets can be divided into countless small portions. This means that originally high-threshold assets (such as private real estate and private equity) will be open to a broader group of investors, greatly reducing the barriers to participation.

Tokenization can also achieve the democratization of shareholder voting. Owning shares means you have the right to vote on shareholder proposals of the company. Tokenization makes voting more convenient, as your ownership and voting rights are recorded digitally, allowing you to participate in voting securely and without barriers from anywhere.

Tokenization can also achieve the democratization of returns. Some investments offer returns that far exceed others, but often only large investors can participate. One reason is the "friction" from legal, operational, and bureaucratic issues. Tokenization can strip away these barriers, allowing more people to gain access to high-return fields.

However, he also candidly pointed out that the widespread adoption of tokenization still faces a critical technical and regulatory challenge. "One day in the future, I believe tokenized funds will become a routine allocation for investors just like ETFs—but the premise is that we need to overcome a key issue: identity verification."

He stated that financial transactions require strict identity verification. Apple Pay and credit cards can facilitate billions of identity verifications daily without barriers. Trading platforms like the New York Stock Exchange (NYSE) and MarketAxess can also achieve this when buying and selling securities. However, tokenized assets will no longer go through these traditional channels, so we need a completely new digital identity verification system.

"It sounds complicated, but the country with the largest population in the world—India, has achieved this goal. Today, over 90% of Indians can securely complete transaction verification through their smartphones."

In this annual letter, the CEO also reviewed the historical development of the capital markets, pointing out their important role in promoting social prosperity and helping individuals accumulate wealth through investment. He mentioned that further financial innovation is still needed to bridge the gap between the public and private markets, and emphasized the importance of expanding investment opportunities, especially for enabling small and medium investors to participate in asset classes that were originally only open to the wealthiest groups.

Despite acknowledging the widespread economic anxiety, the CEO still tried to reassure investors, stating that such times are not new—just like in history, relying on human resilience and the strength of capital markets, the economy will eventually stabilize.

Overall, this annual letter to investors warns of the risks to the dollar's global reserve status and serves as a forecast for the financial future. From the tokenization that reconstructs capital markets to the breakthroughs needed in digital identity systems, this CEO reveals the irrationalities of the existing system and points out the new directions that technological and institutional innovations may bring.