BlackRock unveils spot Bitcoin private trust

Spot BTC private trust will only be available to BlackRock’s US institutional clients

BlackRock offices in New York City                                 
BlackRock has launched a spot Bitcoin private trust - Photo: Getty Images
                                

BlackRock, the world's largest asset manager, has launched a spot Bitcoin (BTC) private trust.

The move is taking place, BlackRock said, because it was “committed to providing clients with access to their choice of investment opportunities”. However, the private trust is only available to US institutional clients.

The spot BTC private trust "seeks to track the performance of BTC".

BlackRock said that despite the current crypto bear market, it was still seeing “substantial interest from some institutional clients” in accessing BTC by using BlackRock technology and product capabilities.

Encouraging signs

BlackRock said it was “encouraged” by organisations such as Rocky Mountain Institute (RMI) and Energy Web, two companies committed to a carbon free future which are developing programmes to bring “greater transparency to sustainable energy usage in BTC mining”.

The mining of Bitcoin uses large amounts of electricity, so attempts are being made to use renewable energy to make the process greener.

RMI and Energy Web, along with the Alliance for Innovative Regulation (AIR), a non-profit company aiming to help transform financial regulation from manual to a digitally native design, jointly announced in April 2021 the launch of the Crypto Climate Accord, a private sector-led initiative committed to making the cryptocurrency industry 100% renewable.

BlackRock said that BTC was the “oldest, largest, and most liquid cryptoasset”, and if stablecoins are excluded, BTC “maintains close to 50% of the industry’s market capitalisation”.

Four areas of interest

Specifically, BlackRock has been conducting work in four areas of cryptos where it sees potential “to benefit its clients and capital markets”: permissioned blockchains, stablecoins, cryptoassets, and tokenisation.

In early August 2022, BlackRock and Coinbase, a cryptocurrency exchange with headquarters in the US, announced a partnership. This resulted in common clients of Aladdin, BlackRock’s portfolio management platform for institutional investors, and Coinbase gaining “access to the digital assets trading lifecycle through connectivity between Coinbase and the Aladdin platform, starting with BTC.”

Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships at the time, said: “This connectivity [Coinbase] with Aladdin will allow clients to manage their Bitcoin exposures directly in their existing portfolio management and trading workflows for a whole portfolio view of risk across asset classes.”

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