BlackRock approaches the crown as the world's largest Bitcoin fund

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BlackRock is close to being crowned the world's largest Bitcoin fund operator, as the asset manager's initial skepticism towards cryptocurrencies has given way to ambitions to become a significant player in the digital asset market.

The US group's Spot Bitcoin exchange-traded fund has amassed $16.7 billion in assets since its inception four months ago, leading it to market leader Grayscale, which has a $28 billion head start over 10 years. is less than $1 billion.

In addition to this, BlackRock has also launched a rapidly growing tokenized Treasury fund, which crypto hedge funds and market makers have started using as collateral for trading coins and tokens.

The move comes from just seven years ago, when CEO Larry Fink called Bitcoin a “beacon for money laundering,” driven by increased customer interest and the rapid growth of digital assets. This is a sudden change.

When launching the Spot ETF in January, Fink called himself “very bullish on the long-term viability of Bitcoin,” calling its foundation an important part of a “technological revolution in financial markets.” said.

“BlackRock has always served the interests of its customers, so why is crypto any different?” said Lee Reiners, a lecturer at the Duke Center for Financial Economics. “However, this does not mean they are true believers. Cryptocurrency is not on their balance sheet, and even if cryptocurrencies go to zero, the impact on their finances will be negligible.” is.”

The asset manager has long been the biggest beneficiary of the Securities and Exchange Commission's decision in January to approve ETFs that invest directly in Bitcoin.

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Fidelity followed in third place with assets of $9.3 billion. Both companies have been helped by huge outflows from Grayscale, which converted its early Bitcoin products into ETFs and charged much higher management fees of 1.5%. BlackRock's fee is 0.25%.

This also contrasts with the approach taken by some of BlackRock's biggest rivals. Vanguard, like ETF giant BlackRock, not only chose not to launch a Bitcoin ETF, but also refused to sell third-party Bitcoin funds to brokerage clients.

BlackRock's growing confidence in the digital asset market comes as its support for Securitizer joins Tradeweb and Hamilton Lane in a $47 million funding round for a platform that uses digital tokens to represent assets. It is also emphasized by Joseph Chalom, BlackRock's global head of strategic ecosystem partnerships, currently serves on Securitize's board of directors.

Two years ago, BlackRock took a minority stake in Circle, which runs the world's second-largest stablecoin USDC. A stablecoin is a type of digital currency that is pegged to a sovereign currency, such as the US dollar.

“While everything is coming together now, please understand that this has been a very deliberate effort over many years to bring the same organizational quality that differentiates BlackRock to this ecosystem. “For us, it's more important than rushing,” Chief Rob Goldstein said. BlackRock's executive director told the Financial Times.

Still, BlackRock's entry into other parts of the crypto market has emboldened investors. In March, it launched a tokenized Treasury fund on the public blockchain Ethereum, allowing all users to track their transactions on a digital ledger.

Already, the BlackRock USD Institutional Digital Liquidity Fund (Buidl) has overtaken rival Franklin Templeton’s tokenized fund to become the largest on the market, raising $382 million compared to Franklin’s $368 million.

Traders and prime brokers are starting to use Buidl as a way to source high-quality collateral for trading cryptocurrencies. Most use stablecoins such as USDC or Tether's USDT, but unlike Buidl, they do not offer yield to holders.

But some say BlackRock's long-term bet is to speed up the settlement of trades and transfer of funds, making it more attractive to investors who want immediate access to funds.

Robert Mitchnick, head of digital assets at BlackRock, said the asset manager previously used the private JPMorgan blockchain to tokenize assets and transactions involving certain money market funds. He said he was testing it. This private blockchain product helped lay the foundation for Buidl.

“That work was extremely important… We believe that the greatest opportunity in this space lies around public blockchains,” Mitchnick said.

At the end of the month, the US will begin requiring the majority of trades to be settled within one business day, but further progress will not be made for investors until much of the financial system is moved to blockchains that can settle transactions. Within minutes, executives have doubts about what will happen.

“There will come a time when the current technological regime will no longer work,” said Ralf Kubli, director of the Casper Association, a Swiss-based blockchain project.

Leading asset managers around the world are “thinking very deeply about what this technology can do for them,” he added.