The case against BlackRock’s attack on Bitcoin
Bitcoin (BTC) received a much-needed boost when BlackRock, the world’s largest asset manager, announced its partnership with Coinbase to offer institutional clients access to BTC.
In a blog post, Coinbase said the tie-in offers users of BlackRock’s Aladdin investment management platform direct access to crypto, starting with Bitcoin. Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock, said:
“Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to effectively manage the operational lifecycle of these assets.”
On the whole, the news was well received by Bitcoin advocates. For example, the founder of 10T Holdings, Dan Tapiero, called this a significant “macro opportunity” for adoption. He also added that just a 5% shuffle in BlackRock’s $10 trillion funds under management would be worth more than BTC’s entire market cap. Similarly, Anthony Pompliano said that this moment is “the birth and scaling of a new multi-billion dollar asset class.”
But while institutional adoption has long been touted as a golden ticket for Bitcoin and cryptocurrency in general, there is a growing consensus that institutional involvement is a double-edged sword.
Has Larry Fink changed his tune?
Like many senior executives, BlackRock CEO Larry Fink has seemingly backed up his opinion on Bitcoin over time.
In October 2017, Fink said that Bitcoin’s popularity demonstrated the demand for money laundering on a global scale. Then in late 2020, the BlackRock CEO appeared to soften his stance by acknowledging that Bitcoin is “here to stay.”
Recently, Fink expressed a positive attitude towards the leading cryptocurrency, saying that it has attracted the interest of prominent billionaires and Wall Street. Also, although it is “untested”, it is still “possible” that Bitcoin could develop into a “global market”.
Based on this sequence of events, it appears that Fink has come full circle with his views on Bitcoin. But does he have it? In a CNBC interview aired in October 2021, Fink was asked if he agrees more with JPMorgan CEO Jamie Dimon’s view that Bitcoin is worthless or if he believes it has value. Fink replied, “I’m probably more in the Jamie Dimon camp.” This response suggests that he has adopted a “can’t beat ’em, join ’em” attitude towards digital assets.
Author Saifedean Ammous recently posted a highly critical tweet about BlackRock’s attack on Bitcoin, calling the company parasitic and “responsible for the bloody ESG crime.” He unsubscribed and warned his followers not to help BlackRock.
Really sad to see the vampires responsible for the bloody ESG crime getting into bitcoin. I hope you reconsider, @black stone. Bitcoin will obsolete parasites like you and take away all your fiat privileges. Don’t help it!! https://t.co/FDdBluHFeL
— Saifedean.com (@saifedean) 4 August 2022
ESG fraud
Environmental, social and governance (ESG) is considered a tool for driving sustainability and building a fairer world. It refers to criteria for assessing a company’s socially conscious behaviour.
The origins of ESG stem from a 2006 UN report entitled Principles for Responsible Investment. However, BlackRock has been a significant proponent of ESG standards to promote what it calls “sustainable investing.” That was until recently.
In a BlackRock report released in late July, the firm said shareholder proposals on ESG issues had fallen by almost half during the last annual meeting. It commented that shareholders’ ESG proposals “sought to dictate the pace” of green transition plans with little consideration of other aspects, according to the FT.
“These factors made these proposals less supportable.”
Critics have long argued that ESG compliance standards are arbitrary and non-standardized, meaning they have little bearing on whether a company is operating socially responsibly. As Elon Musk put it, ESG has become the “weapon of fake social justice warriors.”
In short, ESG should not be a substitute for true sustainability. So why was BlackRock a massive proponent of ESG, and why are they backtracking on it now?
Assessing Bitcoin’s ESG credentials, law firm Kennedys gave BTC the thumbs down, saying it “probably does not belong in an ESG-compliant portfolio.” And that crypto investors are damaging “their ESG credibility and reputation”.
“Until Bitcoin cleans up, or less energy-intensive coins become more mainstream, a company or investor engaging in crypto-related activities risks damaging their ESG credibility and reputation.”
Institutions favor profit above all else
As crypto writer TC Gunter pointed out, Wall Street has never championed Bitcoin and never will. After all, Bitcoin was born as a response to the economic chaos caused by institutional greed. Furthermore, Gunter speculated that Bitcoin market manipulation is standard practice for the Wall Street crowd. According to Gunter:
“During the 2009 bubble, it is estimated that nearly 10 million families lost their homes, savings and futures while Wall Street bankers made billions. That’s where trust dies.”
A recent Yahoo Finance article about the arrest of former Archegos Capital Management private hedge fund manager Bill Hwang provided insight into Wall Street thinking.
Hwang was accused of fraudulently obtaining money to enable huge buy orders for certain stocks. He used paper profits from these trades to borrow more money to repeat the cycle. The use of leverage meant that Archegos owned as much as 45% of Tencent at one point – a concentration far beyond what a bank would lend through normal channels. Gunter said:
“Bill Hwang may be a criminal, or he may simply have been playing the Wall Street game according to a set of unwritten but accepted rules – after all, in this day and age, cheating and lying are practically qualifications for working in high finance .”
Gunter added that Wall Street is making similar moves with Bitcoin. He explained that it works by institutions flooding the market with paper Bitcoin. Companies that buy this asset are encouraged to lend it to brokerages for leveraged shorting.
This process puts selling pressure on Bitcoin, leading to a price drop. The purpose is to shake up BTC hodlers and motivate them to sell. Wall Street manipulators are snapping up the offered tokens for cheap, and Bitcoin is moving from retail hands to institutions.
Blackrock is not accused of manipulating Bitcoin. But as the king of Wall Street, it is not difficult to imagine that they also follow “unwritten but accepted rules”.
