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BlackRock Reveals New Bitcoin Private Trust For US Institutional Clients

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EDITOR'S NOTE: It’s hard to tell these days whether financial institutions looking to stake a share in the cryptocurrency markets are doing so because they believe in crypto’s economic potential or because it’s a profitable wager on the sucker sentiment of the mainstream investing crowd. Whichever case it may be, BlackRock made a deep foray into the crypto waters, launching a spot bitcoin trust for its clients. What it seems to be eyeing further down on the horizon are the various “crypto commodities” that may spawn from the nascent stages of blockchain development. In short, BlackRock appears to be in the early stages of DeFi (decentralized finance) investment. Though such an investment might seem highly speculative (because it is), you can also view it as a hedge against a fintech trend that may be an existential threat to its own business and industry. After all, if people can purchase and send funds peer-to-peer on a blockchain network, what good are banks and most other financial institutions?

World’s largest asset manager “conducting work” on potential of permissioned blockchains, stablecoins, cryptoassets and tokenization.

  • BlackRock has seen “substantial interest from some institutional clients” in crypto despite the market’s steep downturn
  • Its new bitcoin trust follows a deal to connect the firm’s Aladdin platform to Coinbase Prime

Asset management titan BlackRock has delved a bit deeper into the crypto waters, revealing that it has launched a spot bitcoin private trust for US institutional clients. 

“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” the company said in a Thursday statement.

The trust seeks to track the performance of bitcoin. The cryptoasset’s price stood at about $24,600 at 9:45 am ET, down roughly 64% off its all-time high reached last November. 

BlackRock, which managed $8.5 trillion in assets as of June 30, labeled permissioned blockchains, stablecoins, cryptoassets and tokenization as areas in which it sees potential.   

The company also said in the statement that it is “encouraged” by programs by RMI and Energy Web, which it sees bringing transparency to sustainable energy usage in bitcoin mining. 

A BlackRock spokesperson declined to comment. 

The company’s announcement comes about a week after BlackRock partnered with Coinbase to offer institutional clients of its Aladdin platform access to bitcoin. The deal allows for Aladdin users — including asset managers, pension funds, insurers and corporate treasurers — to handle bitcoin exposure directly in their existing portfolio management and trading workflows.  

Industry watchers and executives said the move proves institutional investor interest in the asset class and could spur traditional finance competitors to follow suit. 

BlackRock has slowly warmed up to crypto, launching a blockchain ETF in April. BlackRock CEO Larry Fink said the month prior that the war in Ukraine could accelerate the adoption of digital currency.

Originally published on Blockworks.

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