BlackRock, the world’s largest asset manager, filed an application on Thursday for an exchange-traded fund backed by bitcoin in the U.S.
This is notable for a couple of reasons. First, there are currently no such products in the U.S. The SEC approved several bitcoin
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futures-based ETFs in the past, but it has yet to greenlight anything that is backed by bitcoin.
Secondly, BlackRock
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‘s filing also represents a drastic shift in the firm’s attitude towards crypto since 2018, when Larry Fink, the chairman and chief executive at the firm, told Bloomberg that he hadn’t heard from any clients who were seeking out crypto exposure.
So as cryptocurrencies evolved into a $1 trillion market, here’s how Fink’s comments about the asset class have changed over time, as well as how BlackRock has expanded its footprint in the digital asset space.
In 2017, Fink said that the rapid ascent of cryptocurrencies “identifies how much money laundering there is being done in the world.”
“I am a big believer in the potential in what cryptocurrencies can do,” Fink said a few years ago, during a Bloomberg interview at the BlackRock Fixed Income ETF conference in New York. He also said that he saw “huge opportunities,” but that presently the atmosphere around bitcoin was “more speculative.”
In 2018, during the aforementioned interview with Bloomberg, Fink said that BlackRock was “looking at” the blockchain technologies, but added, “I don’t believe any client has sought out crypto exposure.”
“I have not heard from any one client that they’re looking to buy a cryptocurrency,” he famously said at the time. And the video clip of this interview was making the rounds on Twitter on Friday, following the news of BlackRock filing for bitcoin ETF.
But then in 2020, Fink said that while the bitcoin market was still relatively small compared with other markets, it was possible that it could evolve into a global market.
“Bitcoin has caught the attention and the imagination of many people. Still untested, pretty small market relative to other markets,” he said. You see “these big giant moves every day (in bitcoin)…it’s a thin market. Can it evolve into a global market? Possibly,” he added.
Weeks before that, BlackRock’s chief investment officer in fixed income, Rick Rieder, had even speculated that bitcoin could take some of the shine off gold, possibly one day rivaling the precious metal’s unimpeachable stature over the past 5,000 years as a store of value and a hedge against the devaluing of fiat currencies.
Then in 2021, BlackRock filed to offer clients exposure to bitcoin futures as an eligible investment to two of its funds through two funds.
In that same year, Fink said in an CNBC interview that there was a “huge role for a digitized currency,” whether it was “bitcoin, or something else, or more of a government official digital currency, digital dollar.”
By March 2022, it seemed that BlackRock clients were definitely interested in crypto. Fink wrote in a letter to shareholders that BlackRock was studying digital currencies, stablecoins and the underlying technologies, as the firm had seen increasing interest from its clients. What’s more, Fink added that the Russia-Ukraine war could accelerate the use of digital currencies.
A few months later, in August 2022, BlackRock said it was partnering with Coinbase to offer direct access to bitcoin to some institutional clients. Common clients of Coinbase and BlackRock’s investment management platform Aladdin would get access to crypto trading, custody, prime brokerage, and reporting capabilities.
That same month, BlackRock said it was launching a spot bitcoin private trust for institutional clients in the United States.
By November 2022, Circle said it would begin moving the reserves for its USDC stablecoin into a dedicated fund set up by BlackRock and registered with the U.S. Securities and Exchange Commission.
Which brings us to June 2023, with BlackRock filing an application for a spot bitcoin exchange-traded fund. It will tap Coinbase Global Inc. to provide custody for the ETF, while regulators are increasing their oversight of the crypto industry. The SEC recently sued crypto exchanges Binance and Coinbase, charging they operated unlicensed securities exchanges.
Read: BlackRock is applying for a spot bitcoin ETF. Here’s why it matters to the crypto industry.
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