As early as 2017, Larry Fink, CEO of BlackRock, referred to Bitcoin as a “money laundering index” and has repeatedly criticized cryptocurrencies as something that customers do not want to invest in.
Now, he claims to be a loyal believer in Bitcoin. His company, BlackRock, manages the fastest-growing Bitcoin fund and has established partnerships with top players in the digital asset industry.
Larry Fink’s endorsement of Bitcoin at BlackRock has given legitimacy to the cryptocurrency and indicates that Wall Street is increasingly eager to tap into this market, which has long been seen as the Wild West.
Through low-cost and popular spot ETFs, BlackRock has opened the door for mainstream investors to easily buy and sell Bitcoin, just like stocks.
Rob Goldstein, COO of BlackRock, stated in an interview, “We believe that a core part of our mission is to provide choice and opportunity, which is an important topic for our clients.”
Bitcoin’s resilience also played a role in this decision. The token has experienced ups and downs since its launch, but after each crash, another boom cycle begins, attracting more investors.
Today, the price of Bitcoin has returned to its all-time high, nearly reaching $73,000, which seemed impossible 16 months ago when the cryptocurrency exchange FTX suddenly collapsed and Bitcoin was hovering around $16,000.
Industry critics express surprise at BlackRock’s embrace of cryptocurrencies, as the company faces reputational risks when offering volatile assets to clients.
John Reed Stark, former head of the SEC’s Internet Enforcement Office, stated that companies like BlackRock are clearly attracted to the “fee game.”
He said, “Ironically, it should be decentralized, but what is more decentralized than Wall Street giants is that it charges fees from every possible angle and sells something that no one understands.”
BlackRock currently charges an average fee of about 0.19% for its Bitcoin ETF assets. The fund has reached the fee waiver threshold, where investors pay a fee of 0.12% for the first year for assets under $5 billion or the first year of the fund’s launch. After the first year, the fee will increase to 0.25%.
BlackRock insists that it has conducted years of research on the crypto industry to develop a digital asset strategy and provide clients with what they want.
According to insiders, Bitcoin’s rebound after the cryptocurrency crash in 2022 has solidified BlackRock’s belief in sticking to this strategy.
BlackRock has been one of the driving forces behind the latest surge in Bitcoin. Among the 9 spot Bitcoin ETFs launched in January, its iShares Bitcoin Trust leads in terms of net inflows. In fact, this ETF is the fastest to attract over $10 billion in assets in history.
Many mainstream investors started buying Bitcoin in June when BlackRock entered the race for spot Bitcoin ETFs, as the asset management company has an almost perfect record of approval for ETF applications. Additionally, a court ruling forced the SEC to reconsider applications from competitors, further boosting confidence in getting approval.
Dennis Kelleher, President and CEO of Better Markets, an organization advocating for regulation of the financial sector, said it is not surprising that BlackRock has quickly become a leader in the Bitcoin market.
“BlackRock has unparalleled market penetration, an unmatched distribution network, and strong marketing power, all of which give ordinary investors false comfort.”
BlackRock’s view on cryptocurrencies is starkly different from its biggest competitor, Vanguard. Founded by legendary investor Jack Bogle, Vanguard has stated that it has no plans to launch a spot Bitcoin ETF and will not offer crypto-related products on its brokerage platform. The asset management company, which manages $8.7 trillion in assets, recently referred to Bitcoin as “more speculation than investment” in a blog post.
In addition to the Bitcoin ETF, BlackRock has also established partnerships with some of the largest cryptocurrency participants. It holds a minority stake in stablecoin company Circle Internet Financial and manages over $25 billion in reserves in government money market funds that support Circle’s USD Coin.
BlackRock also collaborates with cryptocurrency exchange Coinbase Global, providing direct access to cryptocurrencies for users of the asset management company’s Aladdin software platform through integration with Coinbase’s institutional division. BlackRock also manages private Bitcoin trusts for professional clients. According to insiders, the assets of this trust fund have exceeded $250 million, and most clients have since transferred funds to the new ETF.
BlackRock’s acceptance of Bitcoin has been gradual. During the pandemic, Rick Rieder, Global Chief Investment Officer of BlackRock Fixed Income, began allocating Bitcoin futures in his funds. Insiders reveal that Robbie Mitchnick, head of digital assets at BlackRock, also helped Fink transition into a Bitcoin believer.
2022 was a year when Fink’s stance on digital assets began to change noticeably. In a conference call in April, he stated that his company was extensively researching the cryptocurrency space and seeing increasing interest from clients.
In the same month, BlackRock participated in a $400 million financing round for Circle. By summer, BlackRock quietly launched a private trust, its first spot Bitcoin product for US institutional clients. The company provided seed funding for the fund with its own capital and scaled it up with external investors.
That year, BlackRock also partnered with Coinbase, allowing institutional clients with Bitcoin holdings on the cryptocurrency exchange to use their software toolkit Aladdin to manage their portfolios and conduct risk analysis. Coinbase also serves as the custodian for its spot Bitcoin ETF.
Today, BlackRock’s cryptocurrency ambitions are no longer limited to Bitcoin. The asset management company is submitting a pending application to the SEC to launch an ETF holding Ethereum, the second-largest cryptocurrency by market capitalization and the native token on the Ethereum blockchain. The regulatory deadline is in May, when multiple similar applications will be decided.
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This article is from Bitpush and the source link is: https://www.bitpush.news/articles/6393488
Tags:
Better Markets
Circle
Coinbase
Larry Fink
Rob Goldstein
SEC
Vanguard
Bitcoin
Spot Bitcoin ETF
Regulation
BlackRock
Note: All Bitpush articles represent the author’s opinions and do not constitute investment advice.
Original article link: https://www.wsj.com/finance/investing/how-bitcoin-made-a-believer-out-of-black…
