When BlackRock, the world’s largest asset manager, filed an application with the US Securities and Exchange Commission (SEC) last week to launch a Bitcoin-tracking exchange-traded fund (ETF), it set the crypto-world alight. While the move was hardly shocking given BlackRock’s established repertoire of 1,300 ETFs and its well-publicized partnership with Coinbase (slated to act as the Bitcoin custodian), it didn’t come without a whirl of conspiracy theories.
This development has indeed sent ripples through the crypto sphere. “The future of crypto is more BlackRock and less Binance,” tweeted Matt Hougan, chief investment officer of Bitwise Asset Management, a sentiment echoed by Galaxy Digital CEO Michael Novogratz who said that BlackRock launching a Bitcoin ETF “would be the best thing that could happen” to Bitcoin.
However, some Wall Street observers are puzzled. The SEC, known for rejecting similar applications from smaller asset managers, might be reluctant to approve the application. This skepticism is fueled by Grayscale’s failed attempt last year to convert a Bitcoin trust into a spot Bitcoin ETF, which led to a lawsuit against the SEC.
Notwithstanding, BlackRock’s rekindled alliance with Coinbase – which recently faced SEC accusations of violating securities laws – could potentially bolster the crypto firm’s reputation. Coinbase CEO, Brian Armstrong, remains undeterred, stating that the charges are solely focused on what constitutes security and expressing confidence in the company’s legal standing.
Within BlackRock, the pivot to crypto has been both an exciting opportunity and a source of exodus. Several employees have reportedly left the company, daunted by the seemingly insurmountable challenges of pioneering digital assets and blockchain research. Despite this, the firm is pushing ahead with its four-pronged crypto strategy: stablecoins, tokenization, permissioned blockchains, and crypto assets.
Amidst the sharp downturn in crypto assets, BlackRock’s leadership continues to highlight its ongoing efforts. CEO Larry Fink confirmed on a recent earnings call that despite the volatility, institutional clients are increasingly keen on understanding how to efficiently access these assets.
The news of BlackRock’s application seems to have reinvigorated the Bitcoin market, pushing its price near the highest level of 2023, exceeding $30,000. However, the reaction hasn’t been all positive. Crypto influencers and armchair analysts have fanned the flames of conspiracy theories, leading to wild speculation about BlackRock’s motives.
Tweets from high-profile individuals have sparked debate and controversy, with claims such as, “They’re not trying to kill crypto. They’re trying to kill the current crypto industry and then hand it over to their cronies…”
BlackRock has remained tight-lipped, declining to comment on these speculative remarks. Nonetheless, the company has found itself under increasing scrutiny from everyday investors and the public. This isn’t new territory for BlackRock; its dominance in the ETF market has often led to criticism from regulators. But the spotlight has intensified in recent times, bringing a renewed mainstream awareness of BlackRock, especially amidst the rise of ESG investing.
It’s clear that BlackRock’s leap into Bitcoin ETFs has triggered a wave of intrigue, speculation, and some controversy. As the firm plows ahead with its crypto strategy, it also faces the challenge of managing perceptions and mitigating the wildfire spread of conspiracy theories in the digital world. Only time will reveal the true impact of BlackRock’s ambitious crypto endeavors.