It was announced not too long ago that investment giant BlackRock had partnered with leading digital currency exchange Coinbase to give its clients the opportunity to invest in crypto assets. Now, it looks like the company is taking its digital currency agenda one step further.
BlackRock Will Offer BTC Spot Trading to Institutional Clients
BlackRock has announced the launch of a new private trust for institutions so they can garner spot BTC exposure. This is a big deal in the sense that to this day, there has never been a spot bitcoin-based exchange-traded fund (ETF) placed on the market, a situation that has caused heavy arguments and fights between financial companies and agencies like the Securities and Exchange Commission (SEC).
While there are ETFs based on futures technology, they are not considered as strong as something that would derive from spot trading. Many investors want to see products that feature real, physical bitcoins, but the pathway has been thin and limited in many ways.
While its new product is not an ETF, BlackRock is offering similar exposure to bitcoin and other crypto assets for its clients through its new trust, which will track bitcoin’s price performance. The product will also exclude expenses and liabilities for institutions that sign up.
In a statement, the company explained:
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.
At the time of writing, BlackRock has more than $10 trillion in assets under its management. The maneuver is certainly an interesting one for several reasons, a big one being that crypto is suffering heavily as of late. The digital currency space is struggling through one of its worst bear markets, with the price of bitcoin having fallen more than 60 percent from its previous November high of more than $68,000 per unit.
Now, the currency is struggling just to maintain a position in the low $20K range, and the crypto space has lost more than $2 trillion in overall valuation. Given these circumstances, it’s odd that BlackRock would choose now to let its clients gain exposure to crypto, but regardless, the move is sure to boost the industry’s presence and make it more mainstream and legitimate.
Its Plans with Coinbase
When discussing the company’s new relationship with Coinbase, Joseph Chalom – global head of strategic ecosystem partnerships at BlackRock – explained in a recent interview:
Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets. This connectivity will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows for a whole-portfolio view of risk across asset classes.
