Author: Huohuo, Vernacular Blockchain
On March 21, BlackRock announced that it will launch the first tokenized fund BUIDL on Ethereum. This move directly made the RWA (Real World Asset, which refers to the tokenization of real world assets through blockchain technology) popularity soaring.
However, this is not the first time that BlackRock has stirred up the crypto market. As early as January, BlackRock took the lead in promoting the long-awaited Bitcoin spot trading fund (ETF) in the industry, which caused a sensation. The crypto market has started a new round of craze, and the price of Bitcoin, which has been low for more than a year, has begun to break through the US$40,000 mark.
It is expected that BlackRock will penetrate deeper into the encryption industry and become a decisive force in the future. As the world’s largest asset management institution, why is BlackRock interested in cryptocurrency? What impact will it have on the subsequent development of the encryption industry? Let’s take a closer look at this new Bitcoin whale in the crypto industry.
BlackRock, whose English name is BlackRock, was founded in 1988 and is currently the world's largest asset management, risk mitigation and consulting company.
BlackRock currently has 89 offices in 38 countries around the world, with more than 16,000 employees and customers in more than 100 countries. At the same time, BlackRock holds stocks in 4,973 companies, including: Apple, Microsoft, Nvidia, Amazon, Facebook, Tesla, Exxon Mobil, etc.
BlackRock's top equity holdings, as of August 2023, Source: startuptalky
RevenueIn 2023, BlackRock's Total revenue was US$17.86 billion, with the largest portion (US$14.4 billion) coming from investment advisory, management fees and securities lending. Theregional contribution is the largest in the Americas, withrevenue of US$11.9 billion in 2023. Overall, financial advisory and management fees make up the bulk of the company's revenue, with US companies accounting for the majority of the company's revenue.
Source: https://in.tradingview.com
According to relevant reports, BlackRock’s assets under management reached US$10 trillion in the fourth quarter of 2023 , it can be said that even if the Bitcoin spot ETF is not launched, as a towering tree in the global financial industry, BlackRock is still firmly in the first place. So why did BlackRock get into crypto? Is it a normal expansion of one’s own development? Or is it because BlackRock sees the potential of Bitcoin and its ability to hedge traditional financial risks? Or does BlackRock think this is a good addition to their portfolio?
In fact, BlackRock has become interested in the crypto industry and blockchain technology as early as the past few years, but there were many challenges at the time. Firstly, the market volatility is relatively high. Secondly, there is a lack of reasonable supervision. Market rules have not been fully established. Moreover, in the past ten years, the SEC has been rejecting applications for spot Bitcoin ETFs due to concerns about market manipulation. Therefore, No obvious big moves were made.
However, on January 11, 2024, a number of institutions led by BlackRock launched the first batch of Bitcoin spot ETFs in the United States, called iShares Bitcoin Trust (IBIT), directly reversing the past. The embarrassing situation of being rejected for spot Bitcoin ETF applications for ten years has opened a new chapter in the development of encryption.
1) One of the biggest promoters of the approval of Bitcoin spot ETFs
BlackRock is an organization with a large number of ETF approval records. According to foreign media According to reports, the company has 575/576 applications approved by the SEC, which can be said to have a success rate of nearly 100%. Only one ETF was rejected in October 2014, which was an actively managed ETF jointly submitted by BlackRock and Precidian Investments. The SEC The reason given for rejection was a lack of transparency in earnings.
However, in the face of the SEC, which has rejected the ten-year Bitcoin spot ETF, BlackRock has made sufficient preparations in the application in order to improve the pass rate. On June 15, 2023, BlackRock When Ryder submitted the application for a spot Bitcoin ETF, he proposed solutions to the SEC's concerns one by one. For example, in order to meet the SEC’s requirements for implementing effective monitoring measures to prevent market manipulation, BlackRock plans to enter into regulatory sharing agreements with relevant well-known platforms and list Coinbase as the custodian of the proposed ETF to ensure the security of Bitcoin. Security management.
Due to BlackRock's participation and reputation, many investment/asset management institutions joined the application competition, such as Fidelity, Invesco, VanEck, Cathie Wood's Ark Investment Management, WisdomTree and many other financial firms have followed suit, with most listing Coinbase as an ETF custody provider.
Unfortunately, on June 30, the SEC said that the documents submitted by BlackRock, Fidelity and other companies lacked clarity and comprehensiveness, and thus rejected the application for a Bitcoin spot ETF. A few days later, BlackRock resubmitted its application. Generally speaking, the SEC’s decision-making time for Bitcoin spot ETF applications is a maximum of 240 days in total. Although there may be lengthy exchanges and discussions, the application has not been flatly rejected as in the past, setting the stage for possible approval in the future. Comes hope, seen as a positive sign of progress.
And based on predictions at the time, and based on the publication time of each ETF application’s rule change document in the Federal Register, Tokeninsight predicted that the eight institutional ETFs may be approved as follows:
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Facts have proved that, in the early morning of January 11, according to the earliest prediction time, the SEC announced its official approval, including 11 spot Bitcoin ETFs, including BlackRock.
After the news was released, Bitcoin surged for a short time, rising to more than 49,000 US dollars. After that, Bitcoin also started a spiral upward process. As of now, in less than three months, During the period, Bitcoin reached a maximum of $71,000.
In fact, as early as the beginning of BlackRock’s application for a Bitcoin spot ETF, the market started a positive cheering mode with prices. Bitcoin exceeded US$30,000 and US$40,000 in October 2023, and reached US$45,000 after the application was approved.
The trend of Bitcoin in the past year
And because 5 of the Bitcoin spot ETF companies that applied for issuance chose CEX Coinbase as their custodian, the price of Coinbase has also increased from 70 in October 2023. The dollar rose all the way to a December high of $187.
coinbase Token price trend in 2023
According to ChainCatcher news on March 24, since its debut on January 11, 2024, the new spot Bitcoin ETF (excluding GBTC) has significantly increased its Bitcoin holdings, with nine new spot Bitcoin ETFs (excluding Grayscale GBTC) currently holding 474,363.55 BTC. Among them, BlackRock IBIT leads the way with 242,829.94 BTC holdings. This reserve makes IBIT a giant among its peers, accounting for 51.19% of the total holdings of these nine companies. When GBTC is considered along with these 9 BTC, the total rises to 824,615.55 BTC, which is approximately 3.92% of the Bitcoin cap.
According to Cointelegraph March 25 news analysis, assuming there are no drastic changes in current capital flows, the number of Bitcoins in BlackRock’s spot Bitcoin ETF may exceed that of crypto asset management companies in the next three weeks. GBTC in grayscale.
Although market predictions are from a short-term perspective, the approval of the Bitcoin spot ETF will The stimulating effect of the market may not be obvious,but in the long term, its existence will significantly enhance the compliance and investability of digital assets, thereby improving market depth and liquidity, and will also help reduce market volatility, Enhance investor confidence.
In general, the reputation and influence of the world's largest asset management company, as well as its expertise and experience in launching and managing ETFs, have convinced the SEC and the market that Bitcoin ETFs Viability and value, BlackRock has made a huge impact on the crypto world. Next, we will take stock of the fact that it has already made many investments and preparations in the encryption field.
2) Major shareholder of the largest Bitcoin holding company
In BlackRock’s cryptocurrency portfolio, it owns MicroStrategy 5.53% of shares. MicroStrategy, a business intelligence and software company, is currently the largest Bitcoin holder. BlackRock acquired shares of MicroStrategythrough its various funds and ETFs, such as the iShares Core S&P 500 ETF, iShares ESG Aware US Aggregate Bond ETF, and iShares Russell 1000 Growth ETF.
MicroStrategy currently has approximately more than 120,000 Bitcoins worth more than $5 billion and has issued more than $2 billion in debt to fund its Bitcoin purchases. BlackRock’s stake in MicroStrategy is equivalent to owning more than 6,600 Bitcoins and is worth more than $300 million, according to a recent analysis by Forbes . That makes BlackRock one of the largest institutional holders of Bitcoin, even though it doesn’t directly own any Bitcoins. BlackRock’s stake in MicroStrategy also reflects its optimistic outlook and confidence in the company and in Bitcoin.
3) US$384 million invested in the leading Bitcoin mining company
BlackRock invested in the Bitcoin mining company in August 2023 It raised $384 million as part of its strategy to explore the potential impact of digital currencies on the global economy.
BlackRock has invested in four Bitcoin industry companies, all of which are currently the largest and most mature Bitcoin block production companies, namely Marathon Digital Holdings, Riot Blockchain, Bitfarms and Hut 8 Mining.
BlackRock’s investment in Bitcoin industry companies is a bold and innovative move.On the one hand, it promotes the growth and development of the Bitcoin network and ecosystem and improves the network’s security, stability and diversity, and supports the innovation and adoption of this technology; on the other hand, it also demonstrates its interest and participation in the cryptocurrency field, as well as its recognition and appreciation of the value and potential of the industry.
4) Close cooperation with crypto industry organizations
Issuers have been dealing with the SEC for a long time regarding the application for spot Bitcoin ETF, and Bailey While actively promoting this matter, Decooperates and consults with other stakeholders and experts in the crypto industry, such as Coinbase, Fidelity, and VanEck, to address the SEC’s concerns and requests.
In 2022, BlackRock reached a cooperation agreement with Coinbase to integrate its Aladdin operating platform with Coinbase’s leading cryptocurrency CEX, Create a robust solution for IBIT ETF.
In addition to the Bitcoin ETF, BlackRock also has partnerships with some of the largest cryptocurrency players. It holds a minority stake in stablecoin company Circle Internet Financial and manages more than $25 billion in reserves in government money market funds, backing Circle’s USDC and more.
BlackRock also manages private Bitcoin trusts for professional clients. The trust's assets have exceeded $250 million, and most clients have since moved money into new ETFs, according to people familiar with the matter.
BlackRock’s acceptance of Bitcoin is gradual. During the epidemic, Rick Rieder, the company's chief investment officer for global fixed income, began allocating Bitcoin futures in his funds. Robbie Mitchnick, BlackRock’s head of digital assets, also helped convert Fink into a Bitcoin believer, according to people familiar with the matter.
Mentioning Fink, he was listed on the "Forbes Global Billionaires List" as early as 2022. Whether it is investment talent, leadership skills or social skills,Larry Fink, 72, Kremlin is known as the "Godfather of Wall Street" and the founder of the "Financial Empire" and has played an important role in the development of BlackRock.
But Fink was not a believer in Bitcoin from the beginning. In 2017, Fink called Bitcoin a "money laundering index" and has repeatedly criticized cryptocurrencies, saying As "something that customers simply don't want to invest in."
It wasn’t until 2022 that Fink’s stance on digital assets began to change significantly. Bitcoin's rebound after the 2022 cryptocurrency crash was a big factor in BlackRock's shift in perspective, according to people familiar with the matter.
In a conference call in April of that year, Fink said the company was researching the cryptocurrency space extensively and was observing growing customer interest. The same month, BlackRock participated in Circle’s $400 million funding round. Then in the summer, BlackRock quietly launched a spot Bitcoin product for U.S. institutional clients as their first private trust product. BlackRock seeded the fund with its own money and scaled it with outside investors.
Also that same year, BlackRock also formed a partnership with Coinbase to allow institutional clients who own Bitcoin on cryptocurrency exchanges to use their software tool suite Aladdin to manage investment portfolios and conduct risk analysis. So, Coinbase is currently the custodian of their spot Bitcoin ETF.
Now, it’s fair to say that Fink is one of Bitcoin’s biggest believers, with his firm BlackRock lending legitimacy to Bitcoin and running the fastest-growing Bitcoin fund, Establishing partnerships with the top players in the digital asset industry and opening the door for mainstream investors to buy and sell Bitcoin as easily as investing in stocks.
Now, BlackRock’s cryptocurrency ambitions are no longer limited to Bitcoin.The asset manager is filing a pending application with the SEC to launch an ETF holding Ethereum. Ethereum is the second largest cryptocurrency by market capitalization and the native token on the Ethereum blockchain. The regulatory deadline is in May, which is worth looking forward to.
As BlackRock’s slogan says“Invest in the New World”< BlackRock believes that cryptocurrency and blockchain technology can transform the financial industry and create new opportunities for growth, efficiency and inclusion.
Perhaps in recognition of the growing demand and adoption of cryptocurrencies among institutional investors, retail investors, governments and businesses,BlackRock’s interest in cryptocurrencies is no longer limited. Rather than jumping on a bandwagon or taking a speculative gamble, treat it as a strategic long-term vision.
It is foreseeable that BlackRock will be indispensable in the future encryption field.
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