BlackRock founder, chairman and CEO Larry Fink has said crypto represents a digitised alternative to popular hedging assets such as gold after his firm filed with the Securities and Exchange Commission (SEC) to launch a bitcoin ETF.
Having previously been more neutral on digital assets than other prominent figures including Warren Buffett, the founder of the world’s largest asset manager has recently been outspoken in favour of the asset class’s potential and last year even describing tokenisation as the “next evolution” in securities.
“Crypto is digitising gold in many ways,” Fink said in a recent Fox News interview. “Instead of investing in gold as a hedge against inflation, a hedge against the onerous problems of any one country or the devaluation of your currency.
“As I have said in the past, we are a believer in the digitisation of products. ETFs were a big revolution for the mutual fund industry and they are really taking over the mutual fund industry.
“We believe if we can create more tokenisation of assets and securities – and that is what bitcoin is – that could once again revolutionise finance.”
Fink continued, stating crypto assets and their underlying technology are an opportunity for asset managers to further “democratise the cost of investing” provide investors with fractionalised access to securities.
“Right now, the bid-ask spread for crypto is very expensive and it does erode a lot of the returns because it costs a lot of money to transact bitcoin.
“Over the last 10 years, we have lowered the cost of iShares ETFs by 30%. What we are trying to do with crypto is make it more democratised and much cheaper for investors.”
Fimk’s comments follow the firm’s surprise move to file for a bitcoin ETF in the US in June.
The iShares Bitcoin Trust is vying to be the first spot bitcoin ETF in the US and will rely on Coinbase Custody for spot market data and storage of its underlying assets if approved.
“We hope, like the past, we can work with our regulators and get this filing approved one day. I have no idea when this one day will be,” Fink continued.
“I cannot get into any specifics but…we work really closely with our regulators and we want to hear what their issues are and how we can fix those.”
BlackRock currently has a formidable track record of ETF approvals, with all but one of its 576 applications being approved by the SEC.
The firm’s bitcoin ETF filing came within weeks of the regulator suing Coinbase for allegedly operating as an unregistered securities exchange.
BlackRock first partnered with Coinbase last August to offer institutional clients using its Aladdin platform the ability to purchase bitcoin. BlackRock launched its own spot bitcoin trust for US institutional clients later that month.
Fellow spot bitcoin ETF applicant Grayscale Investments previously sued the SEC after the regulator thwarted its efforts to convert its spot bitcoin trust into an ETF. The regulator has once again delayed its verdict on Grayscale’s recent spot bitcoin ETF application.
Bloomberg Intelligence senior ETF analyst Eric Balchunas described BlackRock’s move to enter the bitcoin ETF space as a “shocker”.
“There have been no signs at all the SEC is willing to approve but BlackRock is a very connected company so maybe they know something,” he said.
Last year, BlackRock noted “significant interest” from clients in the asset class but told ETF Stream it had “no plans” to launch a crypto ETF.
A spokesperson previously said: “It is worth noting that the SEC has yet to approve an application for a spot bitcoin exchange-traded product (ETP).
“In general, any decision as to whether to launch iShares ETPs is based on an array of factors including market and asset dynamics, regulatory considerations and client demand.”