BlackRock May Launch A Bitcoin ETF When Industry Becomes ‘Legitimate’

BlackRock will not offer a cryptocurrency exchange-traded-fund (ETF) for the foreseeable feature, at least until the crypto industry becomes "legitimate."


BlackRock will not offer a cryptocurrency exchange-traded-fund (ETF) for the foreseeable feature, at least until the crypto industry becomes “legitimate.”

The assertion came from the firm’s CEO Larry Fink, who told CNBC on November 1 that this is not the time to launch a crypto ETF, though he “wouldn’t say never,” and that “when it’s legitimate, yes.”

Largest asset manager in the world

BlackRock is the world’s leading asset manager, and currently oversees over $6.28 trillion in assets under management (AUM), that includes real estate, equity, and fixed income management.

Fink spoke at the New York Times DealBook Conference in Manhattan where he reportedly underscored the fact that ETFs will “ultimately” need to secure the government’s backing to succeed.

He said that he doesn’t see the government greenlighting such financial instruments due to the concerns about the potential use of crypto for money laundering, tax evasion, and other illegal activities.

Fink took issue with Bitcoin’s anonymity feature, saying that it is a potential risk factor that can be exploited to enable many other illicit activities. However, although he said that now wasn’t the time to use crypto as a store of value, he still believes it could happen in the future.

He said:

“I do see one day where we could have electronic trading for a currency that could be a store of wealth.”

Fink’s comments are less welcoming of cryptocurrencies in general, but his view about blockchain mirrored the overall stance taken by major Wall Street firms including BlackRock.

The investment giant has over the years expressed huge belief in the blockchain, a fact that fink emphasized saying blockchain’s biggest impact will be felt in the mortgage industry and “anything that’s labored with paper.”

Many of Wall Street’s CEOs have openly been skeptical of cryptocurrency, though most agree that blockchain has great potential to transform the global economy.

That belief has seen mainstream giants such as J.P. Morgan Chase, Goldman Sachs, IBM, Amazon, Deloitte, and Facebook look at creating blockchain solutions that suit their businesses or that of its customers.

SEC’s ETF decision

BlackRock CEO’s comments were made just days to a U.S. Securities and Exchange Commission (SEC) November 5 deadline for the review of several bitcoin ETF proposals.

The review involves nine exchange-traded funds listing sought by ProShares, GraniteShares, and Direxion.

The regulator disapproved the nine ETFs in August saying that the products failed to meet compliance requirements set out in Section 6(b)(5) of the Exchange Act.

The commission has also delayed a decision on another highly anticipated product- the VanEck/SolidX bitcoin ETF- which is now expected either late December or early 2019.

The SEC expressed doubts about the launch of bitcoin ETFs, pointing out in January this year that there were outstanding “investor protection issues” which needed resolving before these products could be offered to retail investors.

In July, BlackRock reportedly began exploring the possibility of rolling out bitcoin futures among other methods of exposure to cryptocurrency. The expectation was however quickly tempered when the company explained that none of its clients had expressed an interest in crypto.

Earlier this week, Goldman Sachs reported quietly onboarding its customers for cash-settled bitcoin derivative.

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