In recent years, the world of cryptocurrencies has experienced exponential growth, transforming into a trillion-dollar market. BlackRock, the world’s largest asset manager, has not remained unaffected by this industry’s evolution. In a striking departure from their previous stance, BlackRock recently filed an application for a bitcoin-backed exchange-traded fund (ETF) in the United States. This report examines the changing comments of BlackRock’s chairman and CEO, Larry Fink, regarding cryptocurrencies, and explores how BlackRock has expanded its involvement in the digital asset space since 2018.
Shifting Perceptions: From Skepticism to Acknowledgment
Back in 2017, Fink expressed skepticism about cryptocurrencies, stating that their rapid ascent revealed the extent of money laundering in the world. However, just a few years later, during a Bloomberg interview at the BlackRock Fixed Income ETF conference in New York, Fink mentioned being a believer in the potential of cryptocurrencies. He recognized the enormous opportunities they presented but cautioned that the atmosphere around bitcoin was primarily speculative.
BlackRock’s 2018 Approach: Blockchain and Client Demand
In 2018, Fink conveyed that BlackRock was exploring blockchain technologies, but he maintained that none of their clients had shown interest in crypto exposure. His infamous quote stating that he had not heard from any client looking to buy a cryptocurrency became a topic of discussion. Nevertheless, this perspective started to shift within the BlackRock organization.
Recognition of Bitcoin’s Potential and Digital Currency Role
By 2020, Fink acknowledged that although the bitcoin market was still relatively small, it had the potential to evolve into a global market. He recognized the attention and imagination bitcoin had captured and described it as a thin market prone to significant fluctuations. Fink’s comments aligned with BlackRock’s chief investment officer in fixed income, Rick Rieder, who speculated that bitcoin could rival gold as a store of value and hedge against the devaluation of fiat currencies.
BlackRock’s Foray into Cryptocurrency
In 2021, BlackRock filed applications to offer clients exposure to bitcoin futures through two of its funds. Fink also expressed the need for a digitized currency, whether it be bitcoin or a government-backed digital currency like a digital dollar. By March 2022, BlackRock publicly acknowledged the growing interest from its clients in digital currencies and began studying them, along with stablecoins and underlying technologies.
Expanding Footprint: Partnerships and Offerings
In August 2022, BlackRock announced a partnership with Coinbase, enabling select institutional clients to access crypto trading, custody, prime brokerage, and reporting capabilities. They also launched a spot bitcoin private trust for institutional clients in the United States. Later, BlackRock, in collaboration with Circle, established a dedicated fund registered with the SEC to hold the reserves for Circle’s USDC stablecoin.
Current Developments: BlackRock’s Bitcoin ETF Application
In June 2023, BlackRock made headlines once again as it filed an application for a spot bitcoin ETF, marking a significant shift in their stance towards cryptocurrencies. To provide custody for the ETF, BlackRock chose Coinbase Global Inc. However, this move coincided with increased regulatory oversight of the crypto industry, as evidenced by the SEC’s lawsuits against Binance and Coinbase for operating unlicensed securities exchanges.
The journey of BlackRock and Larry Fink’s perspective on cryptocurrencies has traversed skepticism, acknowledgment of potential, and eventual embracing of the digital asset space. As the crypto market grew into a trillion-dollar industry, BlackRock’s evolving stance reflects the changing landscape and increasing interest from their clients. With their recent application for a bitcoin ETF, BlackRock continues to adapt and participate in the crypto market, setting the stage for further developments in the intersection of traditional finance and digital assets. BlackRock, the world’s largest asset manager, has not remained unaffected by this industry’s evolution. In a striking departure from their previous stance, BlackRock recently filed an application for a bitcoin-backed exchange-traded fund (ETF) in the United States.