BlackRock has signaled a major boost to crypto by teaming up with Coinbase on a product designed to help institutional investors trade bitcoin.
The world’s largest asset manager is allowing clients to use its Aladdin investment management system to buy, sell and monitor their cryptocurrency holdings through the largest US exchange, Coinbase.
BlackRock said the partnership will be centered around bitcoin, at least “initially.”
The move is the latest sign that some of the major players in traditional finance, known as TradFi in crypto circles, are confident in the long-term prospects of cryptocurrencies.
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This is despite a brutal market crash in the second quarter of 2022 that has caused some of the largest companies in the sector to enter bankruptcy or insolvency.
It’s also a major show of confidence in Coinbase, which was mired in crisis in July, with multiple Securities and Exchange Commission investigations raising questions about whether it has allegedly been running an unregistered stock exchange.
Coinbase has also cut 1,100 jobs in recent months, after admitting it hired too quickly during the 2021 crypto bull run.
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Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock, said: “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focusing on how to efficiently manage the lifecycle operational of these assets”.
Institutions accounted for roughly three-quarters of Coinbase’s $309 billion in trading volume in the first quarter, the company said in May. Among others, its clients include asset managers, large corporate treasuries and asset managers.
Brett Tejpaul, head of Coinbase Institutional, and Greg Tusar, vice president of institutional product, said BlackRock’s move was “an exciting milestone” and would help create “new entry points as institutional crypto adoption continues to accelerate rapidly.”
BlackRock has already taken significant steps to gain more exposure to the crypto world this year. CEO Larry Fink said in March that the company was looking at how digital assets and stablecoins can be used to help its customers.
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Then in April, BlackRock announced it was part of a $400 million funding round for Circle, the company that manages the USD Coin stablecoin.
However, the latest partnership is the first major show of confidence in the sector since it crashed in the spring. In June, Salim Ramji, BlackRock’s global head of iShares and index investments, told Financial News that the firm was optimistic about the blockchain technology that underpins Bitcoin.
“In terms of the underlying blockchain technology, it’s incredibly innovative and incredibly disruptive,” he said. “It removes friction, enables easier transfer of value so that the underlying plumbing of markets is much more efficient for customers.”
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