San Francisco-based Coinbase said that it would connect to BlackRock's investment technology platform, Aladdin. The system is designed to give clients access to the world's biggest asset manager, as well as essential plumbing for the global investment industry. The first token available will beBitcoin, but others may come later.
Since its listing last year, the tie-up marks the beginning of a victory for Coinbase, which has been under intense pressure due to tumbling prices and falling trading volumes. Some institutional investors are considering allocations in digital token despite the turbulence in the markets this year.
Joseph Chalom, Global Head of Strategic Economie partnerships at BlackRock said that institutional clients are increasingly interested in exposure to digital asset markets and are focused on how to manage the operational lifecycle of these assets.
After Wall Street opened, the shares of Coinbase went up by 44 per cent, before cutting their gain to about 15 per cent. The shares are down more than 60 per cent in 2022, down from 60 per cent.
According to Dan Ives, an analyst at Wedbush Securities, the BlackRock pact was a confidence booster and a much-needed positive for Coinbase after a brutal year.
In June of this year, Coinbase abandoned its growth plans and cut a fifth of its workforce — more than a thousand people — because of the downturn in the criptocurrency markets. A former employee and two of his associates were charged last month with insider trading, adding to its woes.
David Trainer, Chief Executive of New Constructs, said he was sceptical about the Coinbase-BlackRock venture. He said that institutions need more access to criptocurrencies, as any institution that has wanted access could get it through other channels.
Coinbase said it would provide BlackRock clients with trading, custody, prime brokerage and reporting capabilities, and that the tie-up was an exciting milestone for our firm's Aladdin system, which is one of the most widely used pieces of technology in the financial services industry. It is used by asset managers, banks, insurers, pension funds and corporations.
The deal is a stark contrast to the position once held by BlackRock chief executive Larry Fink on the topic of criptocurrency. He said at an Institute of International Finance meeting in October 2017 that Bitcoin shows how much demand for money laundering there is in the world. On a second-quarter earnings call this year, Fink said that the asset manager was still seeing interest from institutional clients about trading cryptocurrencies. In April, it had been studying the digital assets ecosystem, particularly in areas that are relevant to our clients, including stablecoins, cryptocurrencies, tokenisation, permissionedBlockchains, along asset managers such as Fidelity and Marshall.
BlackRock announced a minority investment in Circle, a global global company.
The issuer is the internet payments and treasury infrastructure group that is the issuer.
The stable coin is known as USDC.
A stable coin is a type of coin that is pegged to the US dollar and acts as a bridge between traditional and criptocurrency markets. BlackRock became the primary manager of Circle's USDC cash reserves, with assets invested entirely in short-term US treasuries.