Blackrock To Get Involved With Crypto

February 22, 2022 3:59 pm

There are currently reports that asset management giant Blackrock will be offering crypto trading services to its clients soon via its platform Aladdin.

The firm currently manages about $10 trillion in assets making it the largest asset manager in the world and could greatly change the crypto industry as the total market cap of crypto currently is $1.7 trillion.

With that being said, the CEO of the firm Larry Fink had previously mentioned that there was little demand from clients to get into crypto as the majority of their clients consisted of pension funds and endowments which are primarily conservative capital looking for lower risk.

Despite that, the firm is seeing the rapid inflow into the emerging crypto industry and does not want to miss out on the potential opportunities  to profit from it.

CoinDesk reports:

However, one of Ian’s sources said of BlackRock: “They see all the flow that everyone else is getting and want to start making some money from this.”

Still, it is a bit surprising that the potential Aladdin offering appears to extend beyond bitcoin, though it’s unclear which other “crypto assets” BlackRock would offer to clients.

Bitcoin had solidified itself as crypto’s “blue-chip” asset around the time MassMutual made a $100 million purchase in 2020.

Maybe crypto’s total market cap settling somewhere between $1.5 trillion and $3.0 trillion for the last year or so changed minds at BlackRock.

Maybe it was Jump Trading finally diving into crypto in September. Maybe enough Zoomers pestered their high-net-worth parents about cryptocurrencies at dinner tables until it hit a tipping point.

Whatever the catalyst, I think the news is far more important than people are giving it credit for. BlackRock wouldn’t explore something if there wasn’t demand for it.

The firms move would mean significant changes for both the traditional financial markets as well as the crypto markets given the size of Blackrock and what its involvement would mean.

In essence, this recent move could indicate that the firm is giving crypto an “unofficial approval” which would entice other institutions to start exploring it.

At the very least, it would change the opinions of many traditional investors where they had previously seen the industry as risky.

Currently, Blackrock is considered is considered one of the most important financial entities as it assist the government move financial assets when the Federal Reserve requires it.

Yahoo reports:

That said, beyond helping move financial instruments as needed for the Fed, BlackRock takes part in other ancillary businesses where it can make money, such as buying and selling equities, commodities and real estate on behalf of those businesses or its investors.

But BlackRock is still just that: an ancillary business around the Fed and the economic machine. An ancillary business with a whole lot of capital (and single-family homes).

In all, crypto simply represents a new asset class that BlackRock hasn’t had the pleasure of making money in yet.

That’s why it looks to be extending beyond bitcoin. BlackRock doesn’t need crypto, yet, but it sure won’t hurt it to get involved now.

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