BlackRock enters the cryptocurrency market with its bitcoin private trust

The world's largest asset manager BlackRock, on August 11, announced the launch of its first-ever bitcoin investment product — a private trust through which the company's institutional clients will have exposure to the largest cryptocurrency by market capitalization.

What they're saying

• In a blog post, BlackRock said: "Bitcoin is the oldest, largest, and most liquid crypto asset, and is currently the primary subject of interest from our clients within the digital asset space. Excluding stable coins, bitcoin maintains close to 50 percent of the industry's market capitalization."
• The new trust will primarily track the price of bitcoin, the company said.

Key quote

"Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities."
— BlackRock

• BlackRock announced the new bitcoin private trust just a week after unveiling its partnership with American cryptocurrency exchange Coinbase. Through the partnership, the exchange will provide institutional-grade crypto services to BlackRock's Aladdin clients.
• The asset manager didn't disclose just how involved Coinbase will be in its new bitcoin trust product.

Flashback

• Four years ago, BlackRock CEO Larry Fink said he hadn't heard of any client seeking crypto exposure.
• By March 2022, the tone changed, with Fink saying the firm was studying the growing importance of digital assets and stablecoins and how they can be used to help clients.

Why it matters

• Traditional financial institutions have been increasingly warming up to cryptocurrency over the last few years, with a number of prominent firms now offering their clients some level of exposure to digital assets.
• Fidelity and Goldman Sachs are among the early entrants in the United States.
• Just two days ago, Brazil's largest investment bank BTG Pactual launched a crypto trading platform.
• Singapore's largest bank DBS also started offering crypto services earlier this year.

But in Africa

• Africa has yet to see a traditional financial institution publicly offering digital asset services. One likely reason is that many governments around the continent are unwilling to let their local financial institutions engage cryptocurrencies.
• However, that could change soon, with a growing number of African central banks now looking to regulate crypto assets. In January, Botswana passed a crypto regulation bill. Morocco's and South Africa's central banks are also working on their respective crypto bills.
• In May, Nigeria's Securities Exchange Commission introduced a rulebook for governing the country's digital assets offering and operation.