BlackRock CEO: FTX caused its downfall, but Bitcoin is still revolutionary for the development of financial markets

• The BlackRock CEO still sees crypto-assets as revolutionary, although he disagrees with the issuance of tokens from centralized exchanges.
• The managing director of the asset management company admitted that the firm has a $24 million investment in the now-collapsed FTX.

The FTX collapse has continued to be a topic of discourse among key players in the digital asset industry. The founder of one of the largest asset management companies, BlackRock, noted that the trigger for the FTX crash was due to the exchange that created its original token, FTT. According to BlackRock CEO Larry Fink, the decision of the Sam Bankman-Fried crypto exchange to develop its governing coin led to the downfall of the FTX ecosystem.

Fink added that the entire FTX structure was centralized, which is contrary to the philosophy of the broader cryptocurrency principle. BlackRock is valued at $8 billion and is among the fund managers in the crypto space with a good history in trading and investing.

At the New York Times 2022 Dealbook Summit on November 30, Fink emphasized that cryptocurrency and its underlying blockchain technology remain revolutionary for the financial sector.

Despite other centralized giants such as Binance and Crypto.com accounting for more than $57 billion of the total net amount of $862 billion in crypto market capitalization, the CEO revealed that he still needs to be convinced with their tokens, BNB and Cronos, respectively.

In addition, he emphasized that the majority of the centralized exchanges (CEXs) will not be present in the long run. In a separate interview with Andrew Sorkin, a New York Times journalist, the CEO revealed that while exchange-traded funds (ETFs) drove the latest investment shift, he believes the next evolution will be driven by tokenization.

“I am confident that the next market development and the next change for securities products will be driven by tokenization.” Furthermore, he highlighted some of the benefits of tokenization, insisting that it would be the reason for the sudden change in investment in the short term, as traditional banks will no longer attract the value they do now.

BlackRock’s exposure to FTX

During the interview, the CEO of the asset management company admitted that the firm has a $24 million investment in the now-collapsed FTX, which is a significant exposure. However, Fink declined to comment on speculation that BlackRock and other venture capital firms failed to conduct due diligence on FTX before investing.

Despite not seeming to be caught up in the FTX contagion like other ill-fated crypto exchanges, BlackRock’s FTX investment is seen by many as a poor investment decision. The firm has been one of the most active investors in crypto since 2020. On November 3, reports indicated that BlackRock had become the new asset manager for Circle’s reserve fund, the USDC stablecoin issuer.

Apart from this, on September 27, reports indicate that BlackRock launched an ETF to give institutional investors exposure to cryptocurrency through 35 different blockchain-based firms. With the FTX debacle, the fund manager will be looking to expand its partnership and investment drive to other established firms in the crypto industry.