The BlackRock Trust: Crypto Legitimacy or the Beginning of the End for Bitcoin?





After BlackRock, the world’s largest asset manager, announced on August 11 that it would launch a private bitcoin trust for its clients, some cryptocurrency enthusiasts said the move could legitimize the digital asset in the eyes of more traditional investors.

BlackRock’s new private trust will make bitcoin available to its institutional clients, track bitcoin’s performance, provide direct exposure to the cryptocurrency’s price and, of course, offer trading options.

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“Despite the sharp decline in the digital asset market, we are still seeing significant interest from some institutional clients on how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in its press release.

This news comes shortly after the company announced a partnership with Coinbase to give customers of its Aladin platform access to cryptocurrency trading and custody services. These developments underscore how traditional investors and institutions, from banks to hedge funds, are entering the cryptocurrency market, indicating that digital assets are here for the long haul.

These new approvals give cryptocurrencies an increasing legitimacy, bringing digital assets into the more traditional financial sector and thus making them more accessible to new and old investors.

But does a multinational investment management firm’s advocacy conflict with everything bitcoin originally stood for? Especially when, just five years ago, BlackRock CEO Larry Fink called bitcoin an “index of money laundering.”

Bitcoin’s anarchic beginnings in 2009 heralded a potential democratization of finance. Blockchain technology promised a more open and secure approach to money for everyone. Has the leading cryptocurrency betrayed its revolutionary roots, now that bitcoin is now part of Wall Street’s mainstream investment portfolios?

At the end of June, Coinbase stock was at an all-time low of $47.02. But the announcement of the partnership between BlackRock and Coinbase could be partly responsible for the cryptocurrency exchange’s recent upward trajectory.

But Coinbase shares are still down 75% from their peak, and online skeptics believe that BlackRock’s partnership with Coinbase, which was once at the top of the game, is nothing but a takeover by a centralized financial institution.

And with the added possibility of new regulations from the US Congress, the news further fuels fears that the current crypto winter may not be fleeting, but the beginning of the end for bitcoin.

As is always the case with the market, time will tell.

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ThomasE.
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