- BlackRock is preparing to invest in cash-settled Bitcoin futures, according to a filing with the SEC.
- The world’s largest asset manager is thus indirectly entering the Bitcoin market.
Bitcoin‘s recent rally, which gave investors a new all-time high just below the $42,000 mark, was largely driven by institutional investors. First and foremost, industry giants such as MicroStrategy and Grayscale have shaped the bull run. The latter, as the world’s largest crypto asset manager is seeing massive demand for bitcoin from well-funded investors. But even Grayscale could now be eclipsed – at least indirectly – by BlackRock.
BlackRock is the largest asset manager in the world, looking after $7.81 trillion in capital for clients across a wide range of economic sectors. According to a Form 497 filed with the SEC, the industry giant could promptly invest in bitcoin futures through two of its funds. The document filed Jan. 20 with the U.S. Securities and Exchange Commission states:
Each Fund may use instruments referred to as derivatives, which are financial instruments that derive their value from one or more securities, commodities (such as gold or oil), currencies (including bitcoin), interest rates, credit events or indices (a measure of value or rates, such as the S&P 500 Index or the prime lending rate).
The documents further indicate that BlackRock will only invest in Bitcoin futures, which are cash settled and registered with the CFTC.
Certain Funds may engage in futures contracts based on bitcoin. The only bitcoin futures in which the Funds may invest are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC.
The BlackRock Global Allocation Fund invests in short-term securities, stocks, bonds and currently has a size of just under $16 million. Of this, BlackRock has just under 70% of its assets invested in government and corporate securities. Due to the small size of the fund, some community members are viewing this news rather cautiously.
Nevertheless, this could be the start for more “copycats” in the industry to also invest in Bitcoin futures or even directly in Bitcoin. Back in July 2018, it was revealed that BlackRock had set up an internal working group to explore investment opportunities in Bitcoin and the crypto market in general.
From skeptic to potential investor
BlackRock’s stance on Bitcoin has changed significantly from 2018 to the present. In 2017, BlackRock CEO Larry Fink called Bitcoin a tool for money laundering and terrorism. In early December, on the other hand, Fink already states that although Bitcoin is still a small market, it could develop into a globally comprehensive future market:
Bitcoin has caught the attention and the imagination of many people. Still untested, pretty small market relative to other markets. You see these big giant moves every day…it’s a thin market. Can it evolve into a global market? Possibly.
Moreover, BlackRock CIO Rick Rieder expressed just late last year that Bitcoin could take crucial market share from the precious metal gold in the long run. Rieder said Bitcoin could grow up as a digital version of gold:
Do I think it is a durable mechanism that, you know, that I think could take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around.
Even if BlackRock doesn’t directly enter the crypto market, opinions and views on Bitcoin have changed drastically and could attract more investors and companies.