BlackRock pushes into crypto market with bitcoin private trust
BlackRock has announced the launch of a spot bitcoin private trust, deepening pressure on digital assets as the crypto industry recovers from the fallout of a credit crunch.
The world’s largest asset manager said in a blog post Thursday that the private trust will only be available to institutional clients in the United States, but gave few other details.
US regulators have repeatedly rejected proposals to offer spot bitcoin exchange-traded funds that would be open to retail investors, citing the need for investor protection.
The move by BlackRock potentially puts the investment house, whose CEO Larry Fink has publicly criticized bitcoin, in competition with Grayscale, the world’s largest cryptocurrency investment vehicle.
It comes as the crypto industry deals with the fallout from a sharp drop in the price of assets such as bitcoin, which has lost two-thirds of its value since its all-time high last November. The total market capitalization of cryptocurrencies fell from around $3.2tn to less than $1tn in that time.
“Despite the steep downturn in the digital asset market, we continue to see significant interest from some institutional clients in how they can efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in a statement.
“The launch of BlackRock’s bitcoin fund is a sign of how far crypto has matured as an asset class,” said Sui Chung, CEO of crypto index provider CF Benchmarks.
Earlier this week, BlackRock agreed to join its Aladdin investment technology platform with Coinbase, the crypto exchange. The network is widely used in the fund management industry to connect asset managers, insurance companies and banks to markets.
Other fund managers are also dipping their toes into the crypto market. In recent months, Schroders picked up a stake in crypto-focused fund manager Forteus while Fidelity announced it would allow investors to add cryptocurrencies to their 401(k) retirement plan portfolios.
However, BlackRock’s pivot to digital assets marks a significant development from previous comments by Fink. In 2017, the CEO said “bitcoin just shows you how much money laundering demand there is in the world”, adding “that’s all there is”.
BlackRock’s bitcoin embrace also follows the firm’s previous demands for global environmental, social and governance standards in an effort to bolster sustainability efforts. Bitcoin – which runs on an energy-intensive blockchain system – has been criticized for its carbon footprint and wider impact on the environment.
What does the future hold for digital currencies? Our digital finance news editor Philip Stafford and digital assets correspondent Scott Chipolina had a wide-ranging discussion on an Instagram live about this topic, including the impact of regulation and inflation on crypto. See that here.
