BlackRock Signals Significant Moves into Cryptocurrency, Digital Assets & Blockchain Technology Ecosystem
BlackRock (NYSE: BLK) signals move to Cryptocurrency. The world’s largest asset manager with over $10T in assets, is preparing to enter the blockchain technology, cryptocurrency and digital asset space in a massive way. BlackRock had previously been bullish on crypto assets, but now seems to be close to executing on its overall strategic plans.
There are bold indications that Blackrock is preparing multiple simultaneous offerings in the digital asset ecosystem, each of which has the ability to have major long-term implications on various crypto instruments and sectors, the crypto asset class as a whole, as well as the entire blockchain technology and digital asset ecosystem.
On January 21, BlackRock filed its registration statement with the SEC for the iSHARES® BLOCKCHAIN AND TECH ETF, which is a blockchain and crypto-themed ETF that “…seeks to track the investment results of an index composed of U.S. and non-U.S. companies that are involved in the development, innovation, and utilization of blockchain and crypto technologies”. More specifically, the filing indicates that the ETF will invest in blockchain technology companies, crypto mining companies and mining systems companies, as well as companies involved in crypto trading and exchanges.
On February 8, BlackRock’s 13G filing indicated an increased ownership to 7.3% in MicroStrategy Inc (Nasdaq: MSTR), which is the software company that owns over 125,000 BTC. Important to note that based on its February 1st 8K filing, MircroStrategy itself bought an additional $25M of Bitcoin in January.
According to a report from CoinDesk on February 9, their sources with knowledge of the plans, BlackRock plans to provide crypto trading and institutional lending/credit facilities against crypto portfolios to its institutional clients through its trading platform Aladdin, which stands for Asset, Liability, Debt and Derivative Investment Network.
Stonegate Global’s Perspective
BlackRock, as the largest institutional asset manager in the world, is clearly planting its flag on the digital assets frontier. From our perspective, their most recent moves indicate the following key takeaways:
- Institutional Crypto Prime Brokerage: Leveraging BlackRock’s Aladdin platform, coupled with credit facilities, BlackRock could immediately become the leading prime broker (in the traditional hedge fund sense) and custodian in the cryptocurrency asset class. The implications here are tremendous. This offering lays the foundation for fund managers and institutional investors to utilize crypto as both a diversified alpha play as well as a unique hedge against global macro economic shocks of high inflation, geopolitical crises, along with the potential threat of a global recession. In doing so, this institutional layer by BlackRock opens the gate for conservative investors such as pension funds, foundation and endowments to leverage the various attributes and qualities of cryptocurrency and digital assets to enhance their portfolios in many ways.
- Potential Acquisitions: The moves outlined above also lay the foundation for BlackRock to begin acquiring institutional platforms and service providers in the crypto ecosystem.
- Further Institutional Adoption: Without question, BlackRock’s significant moves into the blockchain and digital asset space will certainly be followed by other major institutional players and global banks.
We have said for many years that “digital assets are the future of the capital markets.” These moves by the world’s largest institutional asset manager confirms that “the future is now” in that the Cryptocurrency asset class has officially become an integral part of the institutional investments arena.
BlackRock is also simply the latest institution to execute on their crypto plans and their sheer size will make others pay attention. The news comes just prior to recent positive regulatory indications in the US, which have been positively received by the global crypto markets. Together, these movements all signal that there is now full acceptance in the traditional institutional investment industry that crypto has become a significant financial asset and a part of the overall traditional financial services and institutional investment ecosystem.
We hope you enjoyed our Crypto360 Spotlight as BlackRock signals move to Cryptocurrency. This is an exciting milestone for Crypto and the overall Blockchain and Digital Asset Ecosystem. We issue interesting commentary on various crypto industry events, announcements and happenings. As a key institutional crypto industry player, we have a unique perspective and insight into the crypto ecosystem and would like to hear from you – please feel free to connect with us. If you’d like to continue receiving our commentary, please feel free to opt in for our newsletter
John McCorvey, CEO – Stonegate Global Fund Services
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John McCorvey is the Chairman and CEO of Stonegate Global, which is a fund administration and diversified financial services company, offering innovative fund administration solutions to investment managers, family offices and private high-net-worth individuals. Stonegate Global is recognized as one of the global leaders in cryptocurrency, having serviced crypto funds since 2013 including some of the largest and most well-recognized funds in the crypto space.