BlackRock, the world’s largest asset manager, has launched a private fund offering US institutional clients’ direct exposure to Bitcoin.
BlackRock revealed the new product in a blog on Thursday, though without giving many details. In that post, he notes that, “Despite the sharp decline in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and profitably access these assets using our technology and product capabilities.”
Bitcoin remains more than 60% below its all-time high of nearly $69,000. However, many investors believe it has found a bottom, in line with the rebound on Wall Street – the two asset classes are more correlated with each other this year than ever – and the increased appetite for risk assets. The digital currency has risen to touch $24,700 again, its highest level since just before falling to its June low.
“Bitcoin is the oldest, largest, and most liquid crypto asset, and is currently the main object of interest for our clients within the crypto asset space,” the post continues.
BlackRock Announcement Details
The announcement comes after CEO Larry Fink said earlier this year that BlackRock clients had been showing “increasing interest” in digital currencies, including stablecoins, and “the underlying technologies,” i.e. the Blockchain.
The company said it has worked on four areas of digital assets and their associated ecosystems where it sees potential to benefit its clients and capital markets more broadly, including: permissioned Blockchain, stablecoins, crypto assets, and tokenization.
The global investment manager is not the only international financial services company that has bet on cryptocurrencies. Last April, Mastercard launched its first cryptocurrency-backed card, in partnership with Nexo, a fintech for buying, changing, and borrowing.
BlackRock, NGOs, and Sustainable Energy
BlackRock also highlights the work of energy NGOs RMI and EnergyWeb for their work “to bring greater transparency to the use of sustainable energy in Bitcoin mining,” and says it will “follow progress around those initiatives.” Institutional investors once hostile to the cryptocurrency industry have changed their tune in recent years, but environmental concerns surrounding the Bitcoin mining process have remained a stumbling block for many.
In March this year, a report by Nigel Bolton, co-chief investment officer of Core Stock Exchange at BlackRock, noted that there are “US companies that can help. We like companies with gas distribution networks and long-term contracts. We also like companies that can help supply gas while also having specialist carbon capture and blue hydrogen service divisions.”
Bolton and his team also highlighted in the report the importance that companies specializing in renewable energy will continue to play. It should be noted that the EU expects to triple the weight of solar and wind energy by 2030. “Direct providers of wind and solar energy are clear beneficiaries. But the supply of raw materials and the extraction of industrial metals is also essential for this process”.
One of the materials that will be key in the energy transition will be copper. “It is a conductive, malleable and cheap material compared to other conductive metals such as silver. Two-thirds of global copper demand is related to electrification.
The launch of the fund marks a new foray for BlackRock into cryptocurrencies. The company, which has some $8.5 trillion in assets under management, recently announced a partnership with Coinbase that allows its institutional clients to buy crypto, starting with Bitcoin.
By Audy Castaneda
