No topic has brought more hope to the cryptocurrency faithful in 2023 than the prospect of a spot Bitcoin ETF, and no one has done more to make that dream a reality than BlackRock CEO Larry Fink.
Bitcoin ETFs, which could open the floodgates for billions of dollars worth of institutional assets to flow into the market, have eluded cryptocurrency investors for over a decade. This was the most anticipated event in the cryptocurrency industry. decryption Founded in 2018. However, it was mostly written off as a loss after repeated rejections from the SEC citing the possibility of Bitcoin market manipulation. Then Fink and BlackRock changed the game in a dramatic and completely unexpected way.
Last June, BlackRock shocked the cryptocurrency world when it filed an application with the SEC for the iShares Bitcoin Trust, placing Wall Street’s weight in the Bitcoin ETF. Fink began singing the praises of Bitcoin to a mainstream audience on national television. Bitcoin ETF odds changed instantly.
But Fink wasn’t always so optimistic. His evolving relationship with cryptocurrencies and what this could mean for the market is why he is so optimistic. decryptionPerson of the Year.
After all, it wasn’t that long ago that Fink dismissed Bitcoin as a “money laundering indicator.” But Adam Cochran, a business professor and partner at Cinneamhain Ventures, says we shouldn’t fixate on comments from 2017.
The cryptocurrency industry should applaud the fact that BlackRock is now willing to put its reputation on the line “to get into this space early,” Cochran said. decryption. “Then don’t put (Fink) on a pedestal,” he said.
Who is Larry Pink?
Much of Fink’s early success came from the development of mortgage-backed securities. It’s a bit ironic considering the role these assets played in the 2008 financial crisis, which itself had a huge impact on early Bitcoin adoption and knowledge.
Before the crisis, there was an increasing number of mortgage-backed securities backed by subprime (extremely risky) mortgages. If the borrower defaulted, the value of the security plummeted. And all the banks and companies that piled up mortgage-backed securities, lured by high interest rates, experienced huge losses. The crisis led to the fall of Wall Street giants Lehman Brothers and Bear Stearns and the takeover of Merrill Lynch.
Although Bank of America acquired Merrill Lynch’s banking business, it was Fink’s BlackRock that acquired Merril Lynch Investment Managers for $9.7 billion in 2006. This brings the company’s assets under management to $1 trillion. Three years later, BlackRock acquired the investment arm of British bank Barclays for $13.5 billion, increasing its assets to $2.7 trillion.
That acquisition included the iShares index fund collection. The cryptocurrency industry now knows this thanks to BlackRock’s iShares Bitcoin Trust and iShares Ethereum Trust applications.
Since 2009, BlackRock has become the world’s largest asset manager. In the following years, Wall Street firms managed or monitored more than $12 trillion. The agency currently oversees $8.5 trillion in 2023 Fortune 500 revenue, or nearly half. The company was so large that Fink took on the role of CEO and posted letters to different top executives each year. It is not surprising that his 2023 letter included a section titled ‘Digital Assets’.
However, controversy arose during this process.
First of all, there is the role Larry Fink’s BlackRock played in the financial crisis and the message inscribed on the Bitcoin creation block. Fink’s BlackRock has made two of its most significant acquisitions since the crisis. Around the same time, Satoshi Nakamoto, the pseudonymous creator of Bitcoin, inscribed a line of text into the first BTC transaction block: “The Times 03/Jan/2009 Chancellor on Brink of Banks for Banks”.
This is a London Times headline about the British government bailing out banks due to the financial crisis. No official explanation was provided, but it is widely believed to highlight the first line of the Bitcoin white paper: “A pure peer-to-peer version of electronic cash allows online payments to be sent directly from one party to another. “Financial institutions.”
This sentiment is not lost on Ram Ahluwalia, CEO of Lumida Wealth, an asset manager specializing in alternative investments and digital currencies.
“Decentralized currencies are implicitly anti-institutional. And BlackRock is one of the largest institutions. “It’s really ironic,” he said. decryption. “One solution to all of this is that BlackRock is a private institution. It is not a sovereign body. And BlackRock has a mission to advance the investment goals of private organizations.”
The company has also clashed with environmental, housing, diversity and inclusion advocates. The allegations of discrimination have become so persistent that BlackRock now faces complaints that it unfairly fired white men and used a “clearly illegal” scholarship program to recruit candidates from underrepresented groups.
Until recently, Fink was a Bitcoin skeptic. Despite BlackRock’s lukewarm reception of Bitcoin in 2021, its chairman said in a 2021 interview:Little investor demand“For cryptocurrency.
Larry Fink’s Bitcoin Reversal
There have been many changes to Bitcoin from the BlackRock CEO and Chairman.
Mark Connors, head of research at cryptocurrency asset manager 3iQ, said: decryption Fink’s embrace of the world’s largest and oldest peer-to-peer cryptocurrency is “fully supportive.”
He was specifically referring to Fink’s comments. fox business Bitcoin was “digitizing gold.”
3iQ has offered spot Bitcoin ETFs to Canadian investors since June 2021. As of November, the fund, which trades on the Toronto Stock Exchange under the ticker BTCQ, had $160 million in assets under management. But 3iQ is positioned to race down the path Fink is paving.
He calls BlackRock’s pursuit of a spot Bitcoin ETF “a concerted effort to safely institutionalize Bitcoin and pave the way for a properly onboarded process to support a compliant approach.” Connors added that it’s almost like the company wants to “provide information to the SEC.”
3iQ is not alone at the starting line. European digital asset manager CoinShares went one step further and acquired an option to acquire Valkyrie’s ETF business. The deal even grants Valkyrie the power to put CoinShares’ name on its Bitcoin ETF application.
“I think it’s more legitimate for institutions that are looking at this and chipping away at it to go to their internal investment committees and their risk managers and say, ‘Let’s take a closer look at this,’” Cochran explained. “So they’ve already got that edge.” I think Larry Fink was nudging them to say, ‘Hey, this isn’t completely crazy.'”
The industry was so optimistic about the approval of the Bitcoin ETF that the price soared, and cryptocurrency Twitter was ablaze with management updates and false alarms.
Case in point: the price of Bitcoin surged 10% following the publication of a false report that BlackRock’s Bitcoin ETF bid had been approved. Finck asked a question. fox business Learn about false reporting and the resulting market movements. “This is just one example of pent-up interest in cryptocurrencies,” he said in an interview. “I think today’s rally is about the flight toward quality.”
Next: January 10
That pent-up interest will have to wait a little longer.
To date, the SEC has twice extended the period within which it can make a decision on the iShares Bitcoin Trust application. Just last week, BlackRock filed another amendment that gave signs that securities regulators had had extensive discussions with asset managers about risks, disclosures to potential investors, and what would happen to the bitcoin BlackRock purchased if the trust were to be dissolved. Submitted.
Analysts at JP Morgan said there is a 90% chance the Bitcoin ETF will be approved before January 10th. Grayscale published a blog post reiterating its previous statement that approval was “a matter of when, not possibility.” And while Coinbase CEO Brian Armstrong has contributed a lot to the growth of cryptocurrency exchanges in other countries, he said: decryption He recently said he was “very optimistic” about approval.
Bloomberg Intelligence ETF analyst James Seyffart said the decision period for several recent applications technically runs from Jan. 5 to Jan. 10, but it’s unlikely securities regulators will make an announcement on Friday and he won’t be able to share any news on that. He said it was even less likely. ETF applicants on the weekend.
So the period is reduced to Monday, January 8th to Wednesday, January 10th. “Mark your calendars people,” he wrote on Twitter.
The period officially runs from January 5th to January 10th. In practice, this means that a potential approval order will come on Monday, January 8, Tuesday, January 9, or Wednesday, January 10. Mark people on your calendar. https://t.co/8ob8Y6pgU5
— James Seyff (@JSeyff) December 1, 2023
Now there’s little left to do but wait. But having what many believe is the best chance for approval for a U.S. Bitcoin ETF tied to the world’s largest asset manager creates an interesting inflection point.
“It forces people to rethink their core assumptions about whether they want to be maximalist around core principles or whether they want to promote adoption,” Ahluwalia said.
Andre Beginski contributed to this report.
editor Guillermo Jimenez and Andrew Hayward
