The world’s largest asset manager, BlackRock Inc., is entering the cryptocurrency market, which has been battered by falling prices and regulatory probes. The company is teaming up with Coinbase Global Inc. to make it simpler for institutional investors to handle and trade Bitcoin.
In New York, Coinbase increased 15% to $92.61 at 1:20 PM. The largest US cryptocurrency trading platform, whose stock had lost more than two-thirds of its value this year through Wednesday, is somewhat relieved by the relationship with BlackRock.
According to a statement released on Thursday, top BlackRock clients will be able to utilize its Aladdin investment-management system to manage their exposure to Bitcoin along with other portfolio assets like stocks and bonds, as well as to facilitate financing and trading on Coinbase’s exchange. According to BlackRock, the relationship with Coinbase, the largest US cryptocurrency trading platform, “will initially be on Bitcoin.”
Even with this year’s collapse in such assets, BlackRock’s action extends the engagement of Wall Street’s traditional financial players in cryptocurrencies and associated technology. In addition to the collapse of the Terra ecosystem and the hedge firm Three Arrows Capital, which has spurred the heightened regulatory investigation, Bitcoin has lost approximately half of its value in 2022.
The US Securities and Exchange Commission is looking into whether Coinbase allowed Americans to exchange digital assets that ought to have been registered as securities. Because of Coinbase’s size in the market and its role as a provider of trading, custody services, prime brokerage, and reporting capabilities, BlackRock decided to work with it. Both companies’ customers will be able to use the services.
The announcement demonstrates that knowledgeable investors are becoming more at ease with the cryptocurrency industry.
According to Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, “our institutional clients are increasingly interested in gaining exposure to digital-asset markets and are focused on how to efficiently manage the operational life cycle of these assets.”
As per the business, institutional investors accounted for around three-quarters of the $309 billion in trade activity on Coinbase in the first quarter. Hedge funds, corporate treasuries, and asset managers are among Coinbase’s clients.
The collaboration is the latest phase in BlackRock’s larger aim to grow into digital assets. In March, CEO Larry Fink stated that the firm was researching the growing relevance of digital assets and stablecoins and how they may be leveraged to assist clients. The following month, the company announced that it had joined a group of investors in Circle Internet Financial, the issuer of USD Coin and that it would attempt to serve as the stablecoin’s primary manager of cash reserves.
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