BlackRock CEO Warns Dollar Could Lose Reserve Currency Status to Bitcoin

BlackRock CEO Larry Fink has warned that the US dollar risks losing its world reserve currency status to digital assets like bitcoin if the United States fails to control its debt. In his annual letter to investors on Monday, Fink pointed out that while the US has long enjoyed the benefits of the dollar as the global reserve currency, this position is not guaranteed.

Fink highlighted alarming financial trends, noting that US national debt has grown at three times the pace of GDP since 1989. This year, government interest payments will exceed $952 billion, surpassing defense spending. If current patterns continue, by 2030, mandatory government spending and debt service will consume all federal revenue, creating a permanent deficit.

"I'm obviously not anti-digital assets," Fink stated. "Decentralized finance is an extraordinary innovation. It makes markets faster, cheaper, and more transparent. Yet that same innovation could challenge America's economic advantage if investors begin seeing bitcoin as a safer bet than the dollar."

The BlackRock CEO's comments come amid his company's own success in the cryptocurrency market. BlackRock's US spot Bitcoin ETF, IBIT, became the largest ETF launch in history, growing to over $50 billion in assets under management in less than a year. The fund has generated:

• Net inflows of $37.4 billion in 2024
• Over $40 billion since launch
• More than half of its demand from retail investors
• Three-quarters of its users from first-time iShares customers

BlackRock recently expanded its bitcoin offerings by launching its first bitcoin exchange-traded product in Europe. The "iShares Bitcoin ETP" is now available on exchanges in Paris, Amsterdam, and Frankfurt, with Coinbase serving as custodian and Bank of New York Mellon as administrator.

Earlier this year, Fink suggested bitcoin could reach as high as $700,000 if investors commonly allocated 2% to 5% of their assets to the cryptocurrency.

Beyond bitcoin, Fink discussed how tokenization could transform financial markets by converting real-world assets like stocks, bonds, and real estate into digital tokens tradable via blockchain. He compared this shift to moving from postal services to email for investing, allowing assets to move directly and instantly without intermediaries.

Fink also addressed the future of capital markets, noting their historical role in expanding prosperity. While acknowledging current economic anxiety, he assured investors that markets will stabilize over time due to human resilience and the strength of capital markets.