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BlackRock Unveils Private Trust Offering Direct Bitcoin Exposure

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By Shella Artillero - - 5 Mins Read

BlackRock is going all-in on cryptocurrencies, along with a new Bitcoin private trust for institutional investors.

The trust is now accessible to institutional clients in the United States, according to the investment firm. It did not disclose any additional information, such as fees or minimum investment demands.

At first, the trust will only grasp Bitcoin, but some analysts believe BlackRock will sooner or later include other cryptos, such as Ether, the second largest token after Bitcoin.

In a statement, the company says: “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.”

The Bitcoin product from BlackRock will face opposition. Grayscale Bitcoin Trust (GBTC), for example, has $15 billion in assets. It deals over the counter like a closed-end trust and has long traded less than its innate net asset value, or NAV.

The private trust is BlackRock’s latest crypto project. Last week, the company announced a deal with cryptocurrency exchange Coinbase Global (COIN) that provide Bitcoin access to users of BlackRock's institutional management system, Aladdin.

Michael Cyprys, an analyst of Morgan Stanley, stated that: “Institutions have struggled to access cryptocurrencies, but BlackRock’s partnership with Coinbase (COIN) would appear to create an institutional on-ramp that has the potential to bring crypto into the mainstream.”

“BlackRock’s outlook on digital assets has changed materially over the last six to nine months from skepticism, to acceptance, to investment”, Cyprys added.

The change could be motivated by the company's efforts to revive its core offerings following a stressful second quarter. High inflation, loss of strength in equity markets, and increasing interest rates weighed on earnings, which tumbled 30% to $7.36 per share, while net assets fell 11% to $8.49 trillion.

BlackRock typically charges investment firms and custodians a price to link up to the Aladdin system — fees that could be adhered to cryptocurrency trading as adoption grows. Experts expect that as the partnership expands, the company will look into trying to expand to other cryptocurrencies. This could quicken the utilization of Bitcoin among institutional investors.