Why BlackRock is bullish on blockchain, but not bitcoin

BlackRock has no plans to launch a bitcoin product, but is bullish on the blockchain technology that underpins cryptocurrencies, according to one of its most senior executives.

“In terms of the underlying technology of blockchain, it is incredibly innovative and incredibly disruptive,” Salim Ramji, global head of iShares and index investments at BlackRock told Financial News during a Barron’s Live event on 22 June. “It takes out frictions, it enables the easier transfer of value in ways that make the underlying plumbing of markets much more efficient for clients.”

Ramji’s optimistic outlook for investments focused on blockchain comes after he told FN in December that the asset manager had “no current plans” to launch crypto ETFs, despite filings from other firms to get bitcoin products approved by the US regulator.

One of the reasons Ramji cited then for holding back was the “incredibly opaque” regulatory framework around cryptocurrencies.

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Ramji told the Barron’s Live event: “We will only do it if it can adhere to the levels of market quality that our clients expects of us and our regulators expect of us.”

However, the world’s largest asset manager is not ruling out a bitcoin play at some stage.

“The whole history of iShares has been about making investing more accessible and more affordable. I think there will be a time that can apply to cryptocurrencies as well, but we will always be looking at the long-term view, as opposed to the short-term trade around when that timing is right,”  Ramji said.

“We continue to be studying and looking at cryptocurrencies themselves, including bitcoin, around: are there ways to make it easier and more accessible for investors — just as we have with the bond market, the gold market and other markets around the world.”

In April, BlackRock rolled out its Blockchain and Tech ETF, which gives investors broad access to companies that are involved in blockchain technology. The ETF, which has a portfolio of 33 companies, invests in Coinbase, Riot Blockchain and Galaxy Digital.

Despite a lack of desire to launch products offering direct exposure to bitcoin and other cryptocurrencies, BlackRock in April emerged as an investor behind a $400m fundraising round or Circle Internet Financial — a crypto-focused company that manages the stablecoin USD Coin. It is the second-largest stablecoin, with about $56bn in circulation, according to CoinMarketCap.

READ BlackRock’s iShares boss says the firm is in no hurry to launch crypto ETFs

Other investors backing Circle, which plans to go public later this year via a special purpose acquisition company, include Fidelity, Marshall Wace and Fin Capital.

BlackRock entered into a broader strategic partnership with Circle, which includes exploring capital market applications for USD Coin.

Ramji said the partnership had “fared rather well, despite many other not-quite stablecoins going through the issues they have been going through”.

“We continue to look at different pilots and different mechanisms about how to experiment with tokenisation technologies,” he added.

To contact the author of this story with feedback or news, email David Ricketts


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