The BlackRock Trust: Crypto Legitimacy or the Beginning of the End for Bitcoin?

Zac Colbert
Thu, August 18, 2022 

After BlackRock, the largest asset manager in the world, announced on Aug. 11 that it will launch a private bitcoin trust for its clients, some crypto enthusiasts said the move could legitimize the digital asset in the eyes of more traditional investors.

BlackRock’s new private trust will make bitcoin available to its institutional clients, tracking bitcoin’s performance, offering direct exposure to the price of the cryptocurrency and of course, trading options.

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“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 press release.

The news comes shortly after the firm announced a partnership with Coinbase to provide clients of its Aladdin platform access to cryptocurrency trading and custody services. These developments highlight how traditional investors and institutions from banks to hedge funds are moving into the crypto market, indicating that digital assets are here for the long haul.

These fresh endorsements lend crypto ever-stronger legitimacy, bringing digital assets into the more traditional financial industry and therefore making them more accessible to both new and old investors.

But does advocacy from a multinational investment-management firm go against everything Bitcoin originally stood for? Especially when, just five years prior, BlackRock CEO Larry Fink called bitcoin an “index of money laundering.”

Bitcoin’s anarchic beginnings in 2009 heralded the potential democratization of finance. Blockchain technology promised a more open and secure approach to currency for everyone. So with bitcoin now trending in mainstream Wall Street investment portfolios, has the leading cryptocurrency betrayed its revolutionary roots?

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At the end of June, Coinbase’s stock was at its all-time low of $47.02. But the announcement of BlackRock and Coinbase’s partnership may be partly responsible for the recent upward trajectory of the crypto exchange’s share price.

But Coinbase shares are still down 75% from their peak, and online skeptics feel BlackRock’s partnership with the once top-of-its-game Coinbase is nothing more than a power grab by a centralized financial institution.

And with the added possibility of new regulations from U.S. Congress, the news further fuels fears that the current crypto winter is not fleeting, but the beginning of the end for Bitcoin.

As is always the case with the market, only time will tell.