BlackRock changes crypto course and partners with Coinbase to offer Bitcoin to investors

Bitcoin’s rise from a little-known digital coin to a major asset class has caused severe polarization among the financial world’s leaders.

Although it’s been over a decade since Bitcoin was created in 2009, governments, businesses, and investors still have mixed opinions about whether the cryptocurrency has long-term value.

Although some larger companies like Tesla and Block have done so hugs Of the technology to a certain extent, many bitcoin critics have suggested that the cryptocurrency will never see mass adoption unless major institutional funds start adding bitcoin to their portfolios.

For many years, it seemed like Bitcoin adoption by major financial institutions would never happen. 2017 Jamie Dimon, CEO of JPMorgan said Bitcoin is a “scam” that will be regulated by governments once it gets too big.

Billionaire investor Warren Buffett, who was once the richest man in the world, even went so far Phone call Bitcoin “rat poison” in 2018 and said it would “almost certainly end badly.”

But despite the pessimism of recent years and a major crypto crash in May 2022, the tide has slowly turned away from cryptocurrencies in favor of digital assets.

Coinbase partnership

One of the most prominent firms to embrace Bitcoin in recent weeks is BlackRock (BLK), the world’s largest wealth manager, which was reported to have over $10 trillion under management as of January 2022.

Although BlackRock has questioned Bitcoin’s rise at every turn, the company sent shockwaves through the financial world with the announcement in a recent blog post that it had partnered with cryptocurrency exchange Coinbase (COIN) to make Bitcoin directly available to institutional investors.

As a result of the agreement, joint customers of Aladdin, Coinbase and BlackRock’s investment management platform, will gain access to crypto trading, custody, reporting and prime brokerage.

Customer access will be provided through Coinbase Prime, a platform that BlackRock and Coinbase will build in phases.

Commenting on the transaction, Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock, said: “Our institutional clients are increasingly interested in gaining exposure to the digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets. “

private trust

Almost a week later, BlackRock announced that it would create a private trust that would provide institutional clients based in the US with access to Spot Bitcoin.

The Trust will be BlackRock’s first product to offer direct exposure to the price of Bitcoin.

in one expressionthe company said, “Despite the sharp downturn in the digital asset market, we still see significant interest from some institutional clients in how our technology and product capabilities can efficiently and cost-effectively access these assets.”

The global wealth manager has announced that it has four main areas of interest related to digital tokens: permissioned blockchains, stablecoins, crypto assets and tokenization.

BlackRock crypto timeline

While BlackRock has finally decided to enter the crypto markets, the company’s path to Bitcoin adoption has been far from smooth.

2017: Opposition to crypto

In October 2017, Larry Fink, the co-founder and CEO of BlackRock, was founded quoted saying the digital token is nothing more than a “money laundering index”.

Fink added: “Bitcoin just shows you how great the demand for money laundering is in the world. That’s all.”

At that point, Bitcoin’s price was hovering around $4,800.

2021: The mood is starting to change

march

BlackRock’s mood began to change in early 2021 when Rick Rieder, the firm’s CIO of global fixed income uncovered that the asset manager had started buying BTC.

Although Rieder declined to provide the specific allocations BlackRock had provided for bitcoin, he did mention that the coin could serve as a hedge against inflation.

Rieder said, “I think crypto in general has captured the imagination of a lot of people. Volatility is exceptional today, but listen, people are looking for stores of value. People are looking for places that could go up assuming inflation goes up and debt goes up, so we started looking into that a bit.”

Later submissions, such as March 31 Disclosure explained that the BlackRock Global Allocation Fund had gained notoriety through CME’s Bitcoin Futures Product – Purchase of 37 units of CME’s March 2021 Bitcoin Futures earlier in the year.

July

Despite BlackRock’s first BTC purchases in 2021, CEO Larry Fink’s BTC stance remained unchanged.

in a (n interview Speaking to CNBC in July, Fink said the wealth manager had seen “very little demand for digital assets.”

Fink also covertly shot Bitcoin investors, stating that “customers interested in crypto or other volatile assets like meme stocks may not be BlackRock’s customers.”

October

By the end of the year, Fink’s tone was beginning to rise soften on cryptocurrency. In an October interview, Fink said he could see a role for Bitcoin, or a digital dollar, in the global financial system.

Fink seemed cautiously optimistic, saying, “I’m not a student of bitcoin and where it’s going, so I can’t tell you if it’s going to $80,000 or zero, but I believe it’s a big role for a digitized currency.” , and I believe that will help consumers around the world.”

2022: BlackRock expands BTC supply

march

Ironically, BlackRock made big strides toward crypto adoption in 2022, the year Bitcoin suffered its second major crash.

Part of the reversal was the Russian invasion of Ukraine, which led to massive global support in the form of BTC and ETH donations that allowed Ukraine to buy much-needed weapons and prop up its economy.

Many Ukrainians also turned to crypto when banks and financial institutions were destroyed, allowing them to keep their money and send money to family members instantly.

Speaking of conflict, Fink said that the “brutal attack” would cause countries to “reassess their currency dependencies.”

He added: “A well-designed global digital payment system can improve the processing of international transactions while reducing the risk of money laundering and corruption.”

“Digital currencies can also help reduce the cost of cross-border payments, such as when foreign workers send their earnings back to their families.”

April

A month later, BlackRock launched a blockchain-focused exchange-traded fund (ETF), giving investors exposure to the crypto and blockchain industry without directly owning digital assets.

The $4.7 million ETF didn’t own any cryptocurrencies, instead tracking a number of international companies involved in the industry.

What does this mean for Bitcoin?

Cathy Wood famous said that if major financial institutions ever adopted BTC, the digital asset had the potential to reach $500,000 per coin.

However, recent news with BlackRock has not spurred buying as many in the crypto community had hoped.

BTC’s price has remained relatively flat since BlackRock’s Coinbase partnership in early August, which has prompted many recommend that we are still in the depths of a bear market.

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