BlackRock Explores Cryptocurrency ETF

July 18th, 2018

First reported by Financial News London, “BlackRock has set up a working group to investigate ways the world’s largest asset manager can take advantage of the fast-growing cryptocurrency market despite its chief executive lambasting the bitcoin sector.”

blackrock cryptocurrency etf
BlackRock is the world’s largest asset manager with $6.3 trillion dollars in assets under management. Ever seen an ETF (equity-traded fund) with a name beginning with “iShares?” That’s BlackRock. They have offices in 30 countries, clients in over 100 countries, and have been called “the world’s largest shadow bank.”

(It’s not as sinister as it sounds).

BlackRock opening an ETF based around cryptocurrencies and blockchain technology would open up cryptocurrency investments to a whole new set of investors. Banks, financial advisors, and other people that manage investments on behalf of their clients would be given much more legitimacy in investing in cryptocurrencies. A balanced ETF would be more stable than holding individual digital coins (although almost certainly it would be classified as a “high-risk” asset). Being given the legitimacy of “an iShares ETF” would open up investment to huge amounts of money from institutional investors like banks, pension funds, insurance companies, etc.

For individual investors that manage their own investments, an ETF takes all the hard work out of buying cryptocurrencies. Buying a crypto ETF alleviates the hassle of setting up accounts, creating wallets, transferring coins to addresses, and having to manage passwords, verifications, addresses, etc. Someone that wants exposure to a high-risk, high-reward asset class like cryptocurrencies could simply buy an ETF, and let a handful of experts manage all the “techy” things that they don’t understand or have the time for.

Considering the gap between people who are interested in investing in cryptocurrencies (~21%), and the number of people that actually do (~5%), simplifying the process of investment could lead to huge inflows of capital. (Data from CoinTelegraph.)

Should ETFs, mutual funds, and other investment vehicles give institutional and individual investors easier exposure to cryptocurrency investments, the digital currency markets could explode in value. We believe it’s a near certainty that an ETF will soon track this market, it’s just a matter of who will create it, and when.

Or, even better…

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