Follow us on:
Follow us on:
Follow us on:
Share this article:
|Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day’s top stories directly to your inbox. Sign up here!
(Kitco News) – While BlackRock’s Larry Fink wouldn’t have committed the company to a spot Bitcoin ETF filing unless he saw massive pent-up demand from investors, the timing couldn’t have been better for crypto, according to Josh Frank, CEO of The Tie.
“It happened when the industry needed it most, when Gary Gensler had crypto on its knees with all of the lawsuits against Binance, against Coinbase,” Frank said. “I think the fact that as Gensler was taking such a harsh stance on crypto, that BlackRock would come out that publicly and do something like that, I think the timing of it was a little bit surprising, pleasantly surprising to me.”
“But the fact that it happened validates what a lot of people have been saying for a while, which is that the institutions are coming.”
The Tie provides a comprehensive digital assets workstation for institutional investors. Frank told Kitco News reporter Ernest Hoffman that BlackRock is much deeper into crypto than most people realize, and they’re very well-positioned to take a first-mover advantage in the spot Bitcoin ETF space.
“I’ve known the BlackRock crypto team for a while, they’ve been around for a while and I think it’s gotten lost in the shuffle, all the different things that they’re doing,” he said. “Aladdin, their portfolio management system, manages hundreds of trillions of dollars in assets, has the 100 largest institutional investors in the world using it. BlackRock had already previously announced they partnered with Coinbase, and they were going to offer Bitcoin buying and selling and crypto trading through Aladdin.”
Frank said he sees the move as a vote of confidence in the broader crypto industry.
“They’re choosing Coinbase as their exchange and custody partner for the product, so I think that is a really big vote of confidence,” he said. “Coinbase is the only publicly-traded crypto exchange, and they’re partnering with them for more than just Bitcoin buying and selling on Aladdin. They’re doing other things within crypto, and a large number of asset managers beyond just BlackRock are looking at tokenization and using these assets for a number of different use cases, so I think it is a vote of confidence for crypto.”
“Obviously, this is Bitcoin, and so we should be clear this is not an ethereum ETF, it’s not anything else,” he noted. “But you have to start somewhere, and you have to start with Bitcoin, so I think that’s a really big vote of confidence.”
Frank agreed, however, that the company wouldn’t be doing this at all unless they had first confirmed that it represented an enormous opportunity for their clients and shareholders.
“BlackRock would not be doing this unless they had demand from existing clients,” he said. “They must have clients that are asking BlackRock to be able to get exposure to a Bitcoin ETF, and they must have a view that there will be some number of billions of dollars, if not tens or hundreds of billions of dollars, in inflows into this product to justify the effort that’s gone into this filing, into launching the ETF.”
“Larry Fink is not going out publicly and talking about this unless he has some bullish outlook that it’s going to be driving revenue into BlackRock,” he added.
As for where this massive influx of capital will be coming from, Frank said many traditional banks are hamstrung by current regulations which require them to hold U.S. dollar collateral equal to their crypto holdings. This means they’re forced to forego treasury yields on that money, which makes it impossible for these institutions to custody crypto.
“These guys are really excited to be able to trade an ETF, and an iShares Blackrock ETF is going to be incredibly liquid, so I think it’s a really big opportunity,” he said. “I think a lot of these organizations have built out crypto teams that are ready to go, but from a compliance perspective they can’t get the buy-in yet.”
“I think that’s probably where a lot of the demand that BlackRock is seeing is coming from.”
To hear Frank’s analysis of the impact on crypto markets of approvals, denials and delays of the ETF applications, and which Bitcoin indicators to monitor, watch the above video.
For Kitco News
We appreciate your feedback.
How can we help you? 1 877 775-4826
Drop us a line email@example.com