The company is considering the investment into cryptocurrency and blockchain technology. Despite how much regulatory scrutiny crypto traders are under, BlackRock has a large enough audience to make it worth their while. The market cap of cryptocurrencies has risen exponentially in recent years as more people have begun investing with them and trading on exchanges like Coinbase or Binance for Bitcoin (BTC), Ethereum (ETH), Litecoin(LTC) Ether Classicblockchain , Ripple XRP .
According to sources, investment manager Blackrock was preparing to offer crypto trading to its institutional clients in February.
In a letter to shareholders dated March 24, BlackRock CEO Larry Fink appeared to confirm these reports. Just five years ago, Fink had labeled Bitcoin “an index of money laundering,” but now he tells shareholders that “a global digital payment system, if thoughtfully designed, could enhance the settlement of international transactions while reducing the risk of money laundering”
For investors to understand the ripple effect of these announcements, they need to learn what BlackRock is, why the news is making headlines, and what it means for crypto and investors in general.
What Is BlackRock?
With over $10 trillion in assets under management, BlackRock is the world’s largest asset manager. While BlackRock is known as an institutional powerhouse, it manages a number of consumer-facing products, including over 120 mutual funds.
Investors are more likely to be familiar with iShares through its exchange-traded fund division, which includes the iShares family. For instance, the iShares Core S&P 500 ETF trades under the symbol IVV and is the second-largest ETF in the world with more than $327 billion.
Preparations for Offering Crypto Trading
Whenever BlackRock makes a move, it makes headlines as one of the industry’s heavy hitters. When it comes to news items related to cryptocurrency, BlackRock preparing to offer crypto trading is No. 1 on the list.
Although nothing has been formally announced, Coindesk reported that BlackRock intends to use Aladdin as a cryptocurrency trading platform for its clients.
In addition, Coindesk reports, the investment manager will set up a credit line through which customers will be able to borrow money while pledging crypto assets as collateral.
Both of these moves would shake the crypto market, as both would transform traditional money managers into a major source of cryptocurrency trading. Currently, the majority of crypto trading takes place at a limited number of online brokers.
Crypto Gains Legitimacy
The introduction of cryptocurrency trading by BlackRock would have a number of implications, but the most important one would be that cryptocurrency would gain additional legitimacy within the investment community.
Since its inception, crypto has been trying to prove its viability as a currency, a store of value, and a store of value with widespread utility. It hasn’t reached its inflection point in terms of widespread acceptance of its viability.
By giving cryptocurrency a trading platform, and therefore credibility, the largest asset manager in the world can increase cryptocurrency’s use, popularity, and functionality.
As a practical matter, this would allow investors around the world access to a huge crypto trading platform located at a reputable investment firm.Because most crypto trading currently takes place at online brokerages, the asset class has a certain “fly-by-night” or “get-rich-quick” feel to it. If and when BlackRock enters the fray, however, the entire playing field – and investors’ perception – will change dramatically.
BlackRock can provide priceless validation in terms of the acceptance of an asset class like cryptocurrency thanks to its investment management expertise.
Schwab and The Crypto-related ETF
BlackRock’s anticipated move sparked a rush among competitors to dip their toes in the crypto waters, perhaps even before BlackRock began offering trading on its platform. As an example, Fidelity is preparing to offer their own Bitcoin exchange-traded fund, dubbed Wise Origin Bitcoin Trust. Schwab will also offer its own competing exchange-traded fund, called Schwab Crypto Economy ETF. It would not be a direct competitor to Fidelity and BlackRock. The ETF would invest in a wide range of companies involved in the crypto world, including miners, developers, exchanges, and other service providers.crypto-related businesses.
Carrying the Cryptocurrency Momentum
It didn’t invent cryptocurrency trading, but it will change the landscape if and when it offers the service to its clients. Others will no doubt follow, as large players such as Schwab and Fidelity rush into the space as well.
It is exactly this kind of momentum that cryptocurrency needs to continue and expand its foothold in the investment universe – and perhaps even eventually in the day-to-day lives of every citizen in the world.
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
