Coinbase stock soars 18% after the deal to provide BlackRock clients access to crypto

Coinbase’s stock soared over 18% following the crypto exchange signing a deal with BlackRock, the world’s biggest asset manager cumulatively manages about $20 trillion. Meantime, Meta announced that it integrated Coinbase’s crypto wallet into the Instagram platform.

According to an announcement published Thursday, the US-based exchange had partnered with BlackRock to provide its clients with various crypto services through Coinbase Prime, the institutional crypto investing platform.

It will provide BlackRock’s “Aladdin” clients with access to crypto trading, custody, prime brokerage, and reporting capabilities alongside Coinbase’s own institutional clients.

“This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows for a whole portfolio view of risk across asset classes,” Joseph Chalom, BlackRock’s Head of Strategic Ecosystem Partnerships, said in a statement.

This move marks a significant shift for BlackRock, whose chairman Larry Fink called Bitcoin an “index of money laundering” five years ago. Since then, the asset management firm has made small advances into Web3, introducing Bitcoin futures trading to its platform and a couple of its funds last year. Fink told shareholders in a March letter that BlackRock was studying “digital currencies, stablecoins, and the underlying technologies” to see how they could help the firm serve its clients.

It’s a great development for Coinvase in a hard time: the company recently laid off 18% of its workforce to prepare for a crypto winter. Its shares are down 60% in 2022.

“Coinbase’s strategy is to provide a single point of entry into the marketplace to do everything that one would want to do with crypto: Buy, sell, store, stake, and so on,” Brett Tejpaul, head of Coinbase Institutional, told Decrypt on August 4. “Having a partnership with Aladdin that gives $20 trillion of capital access to crypto is a huge game changer, I think, for Coinbase and for the industry.”

Coinbase’s stock soared over 18% following the BlackRock news, shortly jumping as much as about 40%; it is also up over 70% in the past month, demonstrating that the company has begun to recover from the May lows as the crypto market pullback hit a trough.

The partnership between BlackRock and Coinbase is significant for traditional finance and the crypto industry. However, it does not come of a sudden. Back in February, BlackRock was reportedly planning to give its institutional clients the ability to trade crypto.

Later in April, the asset manager launched a new exchange-traded fund (ETF) focused on crypto, blockchain technology, and tech companies, with an 11.45% allocation to Coinbase.

According to data from CoinMarketCap, Coinbase now lists more than 200 coins with a daily trading volume of $1.6 billion. At the same time, Coinbase Prime has 13,000 institutional clients using its suite of tools, the company said.

Meanwhile, Meta CEO Mark Zuckerberg announced on August 4 that his company integrated Coinbase’s wallet, among other third-party crypto wallets, into the Instagram platform.