BlackRock launches a new Bitcoin trust, pushing institutional crypto adoption

    13 Aug 2022

    BlackRock announced Thursday the launch of a private trust that will hold Bitcoin and seek to track the asset’s performance, with Coinbase serving as the trust’s custodian. The news marks a giant leap forward in Bitcoin’s institutional adoption, which brought out a flurry of bold calls.

    This development comes one week after BlackRock announced a partnership with Coinbase to provide direct access to crypto, starting with Bitcoin on BlackRock’s investment platform, Aladdin.

    BlackRock’s private Bitcoin trust will be available to the $10 trillion asset manager’s US institutional clients. According to the announcement, Coinbase will serve as custodian over its Bitcoin through its Coinbase Prime.

    “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 said in its statement.

    The offering is a BlackRock client-exclusive version of publicly available Bitcoin trusts such as the Grayscale Bitcoin Trust (GBTC) and Osprey Bitcoin Trust (OBTC), which trade on over-the-counter markets. Unlike exchange-traded funds (ETFs), these trusts cannot continuously create and redeem shares, resulting in trust shares often trading at a discount or premium to Bitcoin’s open market price.

    “​​We see potential to benefit our clients and capital markets more broadly, including: permissioned blockchains, stablecoins, crypto-assets, and tokenization,” BlackRock added.

    In March, BlackRock Chairman and CEO Larry Fink wrote in his letter to shareholders that the Ukraine-Russia war could potentially accelerate the use of digital currencies. Weeks later, BlackRock joined three other firms in investing $400 million into Circle, the issuer of stablecoin USDC.

    In April, Blackrock also launched the iShares Blockchain and Tech ETF, a blockchain exchange-traded fund (ETF). The fund, trading on the NYSE Arca, gives investors exposure to “companies that are involved in the development, innovation, and utilization of blockchain and crypto technologies.”

    Anthony Scaramucci, founder and managing partner of Skybridge Capital, believes BlackRock’s Bitcoin trust, among other developments, will contribute to a demand shock for Bitcoin that will send its price soaring.

    Scaramucci said Friday in an interview with CNBC he’s seen a resurgence of investor interest in the cryptocurrency market. Given the better-than-expected inflation numbers in July, he believes that the global economy can roar back to its Q4 2019 status within 6 to 12 months.

    He added that the future is arriving sooner than he thought and predicted that Bitcoin will reach $300,000 per coin within a few years.

    Meanwhile, Dan Tapiero, ​​the founder of $1 billion crypto fund 10T, told Forbes that Blackrock will open the floodgates of capital into crypto and push its price into seven figures: “5% shift in Blackrock assets is $500 billion greater than today’s Bitcoin value today. A catalyst for a path to $250,000+ Bitcoin is becoming clear,” he said.

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