If the US fails to get its debt under control, the US dollar could lose its role as the world’s leading currency – and Bitcoin could benefit, warns Larry Fink.
In his annual letter to shareholders, Blackrock CEO Larry Fink warns that the US dollar could lose its position as the world’s reserve currency – in favor of Bitcoin.
The US has benefited for decades from the dollar being the world’s reserve currency, the letter states – but there is no guarantee that this will remain so forever. “If the US fails to get its debt under control, if deficits continue to grow, America risks losing this position to digital assets like Bitcoin,” warns Fink.
In fact, the dollar has come under pressure in recent months and has lost five percent against the euro since the beginning of the year. This is due to US President Donald Trump‘s tariff policy.
Blackrock pushes forward with tokenization
He is “of course not against digital assets,” asserts the Blackrock CEO. How could he be, after all, the world’s largest asset manager profits from the digital asset business. Since the regulatory barriers have fallen, it has issued a Bitcoin spot ETF in the US, for example. Just this past March, Blackrock also launched a Bitcoin Exchange-Traded Product (ETP) in Europe.
“But two things can be true simultaneously: Decentralized finance is an extraordinary innovation. It makes markets faster, cheaper, and more transparent. Yet that same innovation could undermine America’s economic advantage if investors begin to see Bitcoin as a safer bet than the dollar,” Fink writes, calculating that the US national debt has grown three times faster than GDP “since the debt clock in Times Square began ticking in 1989.” At $952 billion, interest payments in 2025 will exceed US defense spending for the first time.
The Blackrock CEO, however, sees enormous potential in the tokenization of assets on the blockchain. “I expect that tokenized funds will one day be as familiar to investors as ETFs – provided we solve one critical problem: identity verification,” Fink writes.
Blackrock is investing heavily in digital assets. With the Blackrock USD Institutional Digital Liquidity Fund (BUIDL), the asset manager launched a fund in March 2024 that invests in liquid assets such as US Treasury bonds and runs on the Ethereum blockchain. The fund already has a market volume of $1.7 billion.
The Blackrock CEO also emphasizes the success of his iShares Bitcoin Trust ETF, which currently has a volume of $48 billion. However, it is also true that the Blackrock Bitcoin ETF has lost around seven percent of its value since the beginning of the year, as the crypto markets, after initial euphoria, also reacted to Trump’s second term with price losses.
Trump and the Weak Dollar
During the election campaign, Trump wooed the crypto scene with bold promises, but after taking office, he initially remained vague about implementing regulatory changes. Meanwhile, an advisory board led by Trump-appointed “crypto czar” David Sacks is working on various topics, such as the implementation of a government Bitcoin reserve and a framework for the issuance of stablecoins.
Trump might even be interested in a weakened dollar. That’s at least what a paper by Stephen Miran suggests. The economist and former fund manager is the new chairman of the Council of Economic Advisers, a presidential advisory body on economic issues.
In the paper, circulating under the name “Mar-a-Lago Accord,” Miran outlines a plan to achieve a targeted devaluation of the US dollar, thereby making American exports more competitive and imports more expensive. This is intended to reduce the US trade deficit and strengthen domestic production.
The core of the plan is to persuade the United States’ most important trading partners and creditors to convert their reserves held in US dollars into long-term, low-interest bonds in exchange for military security guarantees and access to the US market.
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