BlackRock, the world’s largest asset manager with $10 Trillion in assets under management, has launched its first-ever spot Bitcoin private trust to expand its reach in the digital assets sector. According to a Thursday blog on the company’s website, the trust, which will be first available to US-based institutional clients, “seeks to track the performance of bitcoin, less expenses and liabilities of the trust.”
“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock wrote.
The announcement comes after the New York-based firm tapped America’s largest crypto exchange Coinbase, last week to provide Aladdin clients access to crypto trading and custody via Coinbase prime, starting with Bitcoin. “Leveraging Coinbase’s comprehensive trading, custody, prime brokerage and reporting capabilities, common clients will be able to manage their bitcoin exposures alongside their public and private investments,” BlackRock said.
The firm’s decision to roll out Bitcoin first was inspired by the cryptocurrency’s strong traits, including its enduring growth over the years, large market capitalization, strong liquidity and the fact that it was the “primary subject of interest” for BlackRock clients within the crypto-asset space.
In a letter to investors in March, BlackRock CEO Larry Fink stated that they were assessing the possibility of offering digital assets services to their clients. In July, the CEO disclosed that BlackRock was working with USDC stablecoin issuer Circle as a custodian and manager of some USDC reserves, stating that he expected that relationship to expand. He also noted that BlackRock was closely monitoring and studying the crypto sector, including crypto assets, stablecoins, permissioned blockchains and tokenization.
In the latest correspondence, BlackRock reinforced those statements, noting that it “has been conducting work in the four areas and their associated ecosystems” where it sees potential to benefit its clients and capital markets more broadly.
According to Ark Invest’s CEO Cathie Wood, BlackRock’s entrance into crypto could see a wall of investor money flow into Bitcoin, bolstering its price significantly. “The illiquid supply, according to our estimates, is about 14 million out of the roughly 18-19 million Bitcoin outstanding. By our calculations, only three million units are truly liquid. So if we were to see a $1 trillion increase in demand , then it would probably drive the price up much higher than the doubling that I just mentioned.” Cathie said in an investor update video on Saturday.
BlackRock now joins the likes of Grayscale in offering clients the opportunity to gain exposure to the leading crypto-asset through an open-ended private trust.