How Bitcoin turned BlackRock from 'doubter' to 'true believer'

Source: Wall Street Journal

In 2017, BlackRock CEO Larry Fink described Bitcoin as “ Money Laundering Index" and has repeatedly criticized cryptocurrencies, calling them "investment products that customers are not interested in."

He said that he is a staunch supporter of Bitcoin. The BlackRock company he leads manages the most prosperous Bitcoin fund and has established close cooperative relationships with leaders in the digital asset industry.

BlackRock CEO Larry Fink’s shift in attitude gives Bitcoin a newfound recognition and reflects Wall Street’s growing interest in a market that has long been seen as untapped. Reality.

BlackRock is giving mainstream investors a low-cost way to invest in Bitcoin as easily as trading stocks through its popular spot ETF.

BlackRock Chief Operating Officer Rob Goldstein emphasized in the interview: "We firmly believe that providing customers with choice and opportunity is a vital part of our mission."

The price fluctuation of Bitcoin will also affect this decision. Bitcoin's price has fluctuated wildly since its launch, with each plunge followed by a new boom that attracted more investors.

Today, Bitcoin prices are back to all-time highs, approaching $73,000 at one point, something that seemed impossible 16 months ago, when cryptocurrency exchange FTX suddenly collapsed and Bitcoin was hovering at $16,000 nearby.

Industry critics say they are surprised by BlackRock’s embrace of cryptocurrencies because of the reputational risk the company faces in offering clients exposure to such volatile assets.

John Reed Stark, the former head of the U.S. Securities and Exchange Commission’s (SEC) Office of Internet Enforcement, said companies such as BlackRock were clearly attracted to the “fee game.”

He said: "The irony is that it is supposed to be decentralized, but it is more decentralized than the Wall Street giants, charging fees from every possible angle and peddling what no one understands. Stuff."

#BlackRock currently charges an average fee of approximately 0.19% on its Bitcoin ETF assets. The fund has already hit the fee-waiving threshold, which would see investors pay 0.12% in fees on the first $5 billion in assets or the fund's first year, after which fees will rise to 0.25%.

BlackRock insists it has conducted years of research into the crypto industry to develop a digital asset strategy and give clients what they want.

Bitcoin’s rebound after the 2022 cryptocurrency crash has strengthened BlackRock’s belief in sticking with the strategy, according to people familiar with the matter.

BlackRock is one of the important drivers of Bitcoin’s latest rally. Among the nine spot Bitcoin ETFs launched in January, its iShares Bitcoin Trust leads the way in net inflows. In fact, the ETF was the fastest ever to absorb more than $10 billion in assets.

Many mainstream investors began buying into Bitcoin in June, when BlackRock joined the race for a spot Bitcoin ETF because the asset manager had a near-perfect record of getting ETF applications approved. In addition, the court ruling forced the SEC to reconsider the competitor's application, which strengthened people's confidence that the application will be approved.

Dennis Kelleher, president and CEO of Better Markets, an organization that advocates for regulation of the financial sector, said it’s no surprise that BlackRock has quickly become the Bitcoin market leader.

"BlackRock has unparalleled market penetration, unparalleled distribution network and powerful marketing power, all attributes that bring false comfort to ordinary investors." Ryder has a very different view on cryptocurrencies than its biggest rival, Vanguard. Vanguard, founded by legendary investor Jack Bogle, said it has no plans to launch a spot Bitcoin ETF and will not offer crypto-related products on its brokerage platform. The asset manager, which oversees $8.7 trillion in assets, called Bitcoin "more of a speculation than an investment" in a recent blog post.

In addition to the Bitcoin ETF, BlackRock has partnerships with some of the largest cryptocurrency players. It holds a minority stake in stablecoin company Circle Internet Financial and manages more than $25 billion in reserves in government money market funds backing Circle’s USD Coin.

BlackRock has also partnered with cryptocurrency exchange Coinbase Global to provide users of asset management firm Aladdin’s software platform direct access to cryptocurrencies through an integration with Coinbase’s institutional arm. BlackRock also manages private equity for professional clients. Bitcoin Trust. The trust has more than $250 million in assets, and most clients have since moved money into new ETFs, according to people familiar with the matter.

BlackRock’s acceptance of Bitcoin has been gradual. During the pandemic, Rick Rieder, the company’s chief investment officer for global fixed income, began allocating Bitcoin futures to his funds. Robbie Mitchnick, BlackRock’s head of digital assets, also helped convert Fink into a Bitcoin believer, according to people familiar with the matter.

2022 is the year that Fink’s stance on digital assets begins to change significantly.

In a conference call in April of that year, he said his company was researching the cryptocurrency space extensively and was seeing growing customer interest.

That same month, BlackRock participated in Circle’s $400 million funding round, and by the summer, BlackRock quietly launched Private Trust, its first spot Bitcoin product for U.S. institutional clients. The company seeded the fund with its own capital and worked with outside investors to scale it.

The same year, BlackRock also formed a partnership with Coinbase, allowing institutional clients who own Bitcoin on cryptocurrency exchanges to use its suite of software tools, Aladdin, to manage their portfolios and perform risk analysis. Coinbase is also the custodian of its spot Bitcoin ETF.

Now, BlackRock’s cryptocurrency ambitions are no longer limited to Bitcoin, as the asset manager is filing a pending application with the SEC to launch an ETF holding Ethereum, which has a market capitalization of Regulators for the second-largest cryptocurrency and the native token on the Ethereum blockchain have a deadline of May to decide on a number of such applications.

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