- BlackRock Inc. is partnering with Coinbase Global Inc. to make it easier for institutional investors to manage and trade Bitcoin.
- The BlackRock-Coinbase Global partnership demonstrates that there is still demand for cryptocurrency exposure from sophisticated investors, despite the sharp decline in prices this year.
In a huge fillip for the cryptocurrency industry, the world’s biggest asset manager BlackRock (+0.79%) is partnering with exchange Coinbase Global (+10.01%) to make it easier for institutional investors to manage and trade Bitcoin.
The announcement by Coinbase Global and BlackRock sent shares of the former surging by as much as 15% and provides much needed relief for the embattled cryptocurrency exchange which is having to contend with decreasing trading volumes and stagnant prices.
Unfortunately, Cathie Wood’s Ark Investment Management was unable to benefit from the rebound in Coinbase Global’s share price, with her ETFs having dumped shares of the cryptocurrency exchange just weeks prior.
Coinbase Global has roughly tracked the fortunes of the cryptocurrency industry, having shed some two-thirds of its value and market cap this year alone.
According to BlackRock, clients will be able to use its Aladdin investment management system to oversee their exposure to Bitcoin along with other portfolio assets such as stocks and bonds, integrating the nascent asset class into more investors’ portfolios.
In a statement released yesterday, BlackRock highlighted that the initial focus for its partnership with Coinbase Global will be “on Bitcoin.”
Unlike the Crypto Winter of 2018, institutional interest and participation in cryptocurrencies is growing despite the bear market and BlackRock’s move deepens Wall Street’s involvement in the sector.
Bitcoin has lost over half its value in 2022 alone and numerous high-profile collapses of some of the biggest projects and companies in the cryptocurrency sector have invited greater regulatory scrutiny to the sector.
Unlike other cryptocurrencies, the regulatory risks of BlackRock’s partnership with Coinbase Global, insofar as they center around Bitcoin, are somewhat contained, given that the cryptocurrency has clearer regulatory status in Washington, as opposed to say the slew of other cryptocurrencies that the U.S. Securities and Exchange Commission have declared as “unregistered securities.”
More importantly, the BlackRock-Coinbase Global partnership demonstrates that there is still demand for cryptocurrency exposure from sophisticated investors, despite the sharp decline in prices this year.
Institutional investors are also becoming increasingly important to Coinbase Global, with the exchange revealing in May this year that about 75% of its US$309 billion in trading volume in the first quarter of this year coming from institutional investors such as hedge funds, corporate treasuries and asset managers.