CEO of the world's largest asset management company warns: Bitcoin may challenge the global status of the dollar

On March 31, the CEO of one of the world's largest asset management companies released a 27-page annual letter to investors. In this letter, the CEO issued a rare warning: if the United States cannot control its expanding debt and fiscal deficit, the dollar's status as the "global reserve currency" for decades may ultimately give way to emerging digital assets like Bitcoin.

Bitcoin May Undermine the Dollar's Reserve Currency Status

The CEO raised a thought-provoking question on page 20 of the report: "Will Bitcoin undermine the dollar's status as the reserve currency?"

He pointed out that for decades, the United States has benefited from the status of the dollar as the global reserve currency. However, this status is not a permanent guarantee. Since the "national debt clock" in Times Square started counting in 1989, the growth rate of U.S. national debt has been three times that of GDP. This year, interest expenses alone will exceed $952 billion, surpassing defense spending. By 2030, mandatory government spending and debt service will consume all federal revenue, creating a long-term deficit.

While warning about the risks of traditional finance, the CEO also made it clear that he does not oppose the development of digital assets. He wrote: "It should be noted that I clearly do not oppose 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 this innovation that could also undermine the economic advantages of the United States—if investors start to believe that Bitcoin is safer than the dollar."

In reviewing performance, he pointed out that the company's Bitcoin ETF launched in the United States became the largest exchange-traded product debut in history, surpassing $50 billion in assets under management in less than a year. This is the third-ranked product in the entire ETF industry in terms of asset attraction, second only to the S&P 500 Index Fund. 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 (ETPs) in Canada and Europe.

The CEO further pointed out that ETFs have not only achieved great success in the United States but are also becoming a key tool for promoting the development of investment culture in Europe. He stated that many European investors entering the capital market for the first time are taking their first steps through ETFs. Currently, only one-third of European individual investors participate in capital market investments, a figure that is far lower than the over 60% in the United States. This not only causes them to miss out on the growth opportunities offered by the capital market, but in a low-interest-rate environment, their savings account returns are often eroded by inflation.

In order 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 the tokenization of physical assets, calling it the "highway" of 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 pipeline" established during the era when trading floors were dominated by shouting orders 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 in succession, carefully checking details at each step. In the 1970s, when market sizes were smaller and trading frequencies were lower, this relay method made sense. But today, continuing to rely on SWIFT is as inefficient as sending emails to be forwarded by the post office.

Although this system was reasonable in the past, its efficiency can no longer support the financial demands of globalization and digitization.

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

He further depicted how tokenization profoundly changes the financial ecosystem, undoubtedly showing optimism for the physical asset tokenization market. "It is the conversion of assets in the real world (such as stocks, bonds, real estate) into digital tokens that can be traded online. Each token represents your ownership of a specific asset, much like a digital property certificate. Unlike traditional paper certificates, these tokens securely exist on the blockchain, making buying, selling, and transferring instantaneous, without 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 need to close; 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 more growth."

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

Tokenization can also democratize shareholder voting. Owning stocks means you have the right to vote on shareholder proposals. 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 have returns that far exceed others, but often only large investors can participate. One reason is the "frictions" of legal, operational, and bureaucratic issues. Tokenization can strip away these barriers, allowing more people to gain access to high-return sectors.

However, the CEO 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 daily allocation for investors just like ETFs - but the premise is that we need to tackle a key issue: identity verification."

He stated that financial transactions require strict identity verification. Certain payment systems and credit cards can complete billions of identity verifications daily without barriers. Some trading platforms 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 smartphones."

In this annual letter, the CEO also reviewed the historical development of the capital markets, highlighting their important role in promoting social prosperity and helping individuals accumulate wealth through investment. He mentioned that there is still a need to further drive financial innovation to bridge the gap between the public and private markets, and emphasized the importance of expanding investment opportunities, especially allowing retail investors to participate in asset classes that were originally only open to the wealthiest individuals.

Despite acknowledging the widespread economic anxiety, the CEO still tried to reassure investors by stating that such times are not new—just as in historical cases, 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 prediction about the future of finance. 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.