SUMMARY
- BlackRock files for a groundbreaking Bitcoin-backed ETF in the United States, signaling a major shift in the firm's stance towards crypto.
- Despite initial skepticism, BlackRock's CEO Larry Fink now recognizes the potential of cryptocurrencies and the firm expands its digital asset footprint.
- Amid increasing client interest and regulatory scrutiny, BlackRock partners with Coinbase to offer direct access to Bitcoin for some institutional clients.
BlackRock, globally renowned as the largest asset manager, recently submitted a groundbreaking application for a Bitcoin-backed exchange-traded fund (ETF) in the United States. This move is particularly significant due to the absence of similar offerings in the country. Although the SEC has granted approval to numerous Bitcoin futures-based ETFs, the authorization for an ETF directly underpinned by Bitcoin remains outstanding.
This audacious stride from BlackRock also underlines a major shift in the firm's stance towards cryptocurrencies since 2018. At the time, Larry Fink, the firm's Chairman and CEO, disclosed in an interview with Bloomberg that their clientele showed no discernible interest in crypto exposure. Fast forward to the present, as the cryptocurrency market swells to over a trillion dollars, BlackRock's digital asset footprint has significantly expanded.
Historically, Fink's remarks about the asset class have evolved in tandem with its rapid growth. Back in 2017, Fink discussed cryptocurrencies in the context of money laundering. However, during a later interview, Fink confessed his belief in the potential transformative power of cryptocurrencies, acknowledging the vast opportunities they present, even though he found the Bitcoin environment highly speculative at the time.
In 2020, Fink made an intriguing observation. He conceded that while Bitcoin's market remained relatively petite compared to others, it held the potential to burgeon into a global market. This was on the heels of BlackRock's Chief Investment Officer in fixed income, Rick Rieder, suggesting Bitcoin could potentially challenge gold's longstanding supremacy as a store of value.
Fast-forwarding to 2021, BlackRock made bold moves to offer clients exposure to Bitcoin futures via two of its funds. Echoing these actions, Fink, in an interview with CNBC, voiced his belief in the critical role of digital currencies, be it Bitcoin, a state-backed digital currency, or a digitized dollar. By March 2022, BlackRock's clientele had developed a distinct interest in crypto, with Fink revealing to shareholders that the firm was deeply researching digital currencies, stablecoins, and their underlying technologies.
In August 2022, BlackRock announced partnerships with Coinbase to offer some institutional clients direct access to Bitcoin. The partnership would also offer shared clients access to crypto trading, custody, prime brokerage, and reporting capabilities. That same month, the firm launched a spot Bitcoin private trust for its US institutional clients.
November 2022 saw Circle move the reserves for its USDC stablecoin into a dedicated fund set up by BlackRock. Fast forward to June 2023, BlackRock submitted an application for a spot Bitcoin ETF. In a move signaling the increased regulatory scrutiny in the sector, the SEC recently filed lawsuits against crypto exchanges Binance and Coinbase, accusing them of operating unlicensed securities exchanges.
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