BlackRock, the world’s largest asset manager with $7.81 trillion under management, is getting into the bitcoin business for the first time and recruiting a vice president of blockchain for its New York office.
Cash-settled bitcoin futures will be among the assets BlackRock clients can buy, available via two funds — BlackRock Strategic Income Opportunities and BlackRock Global Allocation Fund Inc., Bloomberg reported.
With cash-settled bitcoin futures, the holder will receive a simple cash credit once the contract expires. Such settlements do not require physical delivery of the underlying asset, according to Business Insider.
BlackRock’s move into bitcoin shows that the asset class is gaining respectability, said Nic Carter, general partner at Castle Island Ventures.
“It’s certainly more evidence for the institutionalization thesis that’s really been the theme of this bull market,” Carter said in a Bloomberg report.
BlackRock did not say which commodity exchange it will choose to execute the crypto futures buys, but CME is the only exchange registered with the Commodity Futures Trading Commission that offers similar futures products, according to CoinDesk.
Documents filed Wednesday with the U.S. Securities and Exchange Commission warned that investments in these futures could carry risks of illiquidity due to the “relatively new” market. Volatility, valuation risks and regulations could also affect the price and “adversely impact a fund,” BlackRock said.
Before Wednesday, BlackRock never mentioned “bitcoin” in any of its regulatory filings. In November, the company’s CIO for fixed income, Rick Rieder, told CNBC that cryptocurrency may be “here to stay,” was “much more functional” than gold and could even replace it “to a large extent.”
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BlackRock recently placed an ad for a blockchain and crypto executive, seeking a vice president of blockchain for its New York office. Candidates should be able to create valuation models for cryptocurrencies and evaluate governance models and other aspects of the underlying technology, the posting said, according to CoinDesk.
Bitcoin stocks rose to an all-time high near $42,000 earlier in January, driven mostly by massive government stimulus relief during the coronavirus pandemic. Bitcoin traded around $31,433.03 on Thursday as of this writing, down 8.93 percent for the day.
BlackRock reported assets under management of $8.68 trillion as of Dec. 31. CEO Larry Fink said in December that the world’s No. one cryptocurrency is seeing giant moves daily and could become a global market, Business Insider reported.
Not everyone is a crypto fan. Janet Yellen, former head of the Federal Reserve and President Joe Biden’s pick for Treasury Secretary, said earlier this week that bitcoin and crypto were “mainly” used for illegal activity and their use should be curtailed.
