The world’s largest asset manager Blackrock has partnered with U.S. crypto exchange Coinbase to offer its clients access to crypto trading and custody services. Institutional clients trade with the crypto exchange’s platform through its long-established interface.
For BlackRock, the partnership is the next step in a broader strategy to expand into the digital assets space. The company is exploring the growing importance of crypto assets and stablecoins, particularly in terms of how they can be used to support their clients, according to CEO Larry Fink. In April, the investment giant joined a group of investors in Circle Internet Financial. The asset manager said it would act as the primary custodian of the stablecoin USD Coin (USDC) cash reserves.
Adoption by institutional investors
BlackRock’s move deepens Wall Street financial players’ exposure to cryptocurrencies and related technologies. The asset manager’s announcement underscores that traditional institutions such as pension funds, hedge funds and banks have invested in crypto assets in recent years and are betting that the alternative asset class will be around for the long haul.
Cryptocurrency exchange Coinbase endured a rocky few weeks due to the U.S. Securities and Exchange Commission’s (SEC) investigation and was arguably strengthened by this partnership. The SEC has been monitoring the exchange’s cryptocurrency listings for some time and has classified some tokens as unregistered securities. The collapse of the Terra ecosystem and hedge fund Three Arrows Capital have also raised questions about the market’s resilience and led to increased regulatory scrutiny.
Now Aladdin is trading with Bitcoin
Blackrock supports its institutional clients in managing their portfolios with a range of software tools. One of these is the Aladdin analysis system, which BlackRock uses to evaluate individual assets. The system has been fed all sorts of data since 1988 and, with around 6,000 computers, generates a collective intelligence that watches over 10% of global investment assets.
“The Coinbase partnership between BlackRock and Aladdin is an exciting milestone for our company. We are committed to driving the industry forward and creating new access points as institutional use of cryptocurrencies continues to grow rapidly.” – Brett Tejpaul, Head of Coinbase Institutional
According to the company, the program can cover the entire investment process across all asset classes, pooling the group’s collective knowledge. The company officially sees Larry Fink’s analysis system as an advisor, and now it will also be equipped with trading data on cryptocurrencies. The move into crypto was revealed by insiders several months ago.