BlackRock, the world’s largest asset manager, has been accumulating Bitcoin quietly during the recent market downturn, according to a new report. The report, published by CoinDesk, claims that BlackRock has been using a private trust, launched in 2022, to buy and hold Bitcoin on behalf of its institutional clients. The trust, which is not registered with the SEC, has Coinbase as its custodian and charges a 2% annual fee.
The report cites anonymous sources familiar with the matter, who say that BlackRock has been buying Bitcoin since early 2022, when the price of the cryptocurrency dropped below $30,000. The sources also claim that BlackRock has invested hundreds of millions of dollars in Bitcoin through the trust, and that it plans to increase its exposure in the future.
BlackRock’s interest in Bitcoin is not surprising, given that the company has expressed positive views on the digital asset in the past. In January 2021, BlackRock’s chief investment officer Rick Rieder said that Bitcoin could replace gold as a store of value. In February 2021, BlackRock filed documents with the SEC indicating that it could add Bitcoin futures to some of its funds. In March 2021, BlackRock’s CEO Larry Fink said that he was fascinated by Bitcoin and that it could become a global asset.
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BlackRock received $100,000 as “seed capital” for its proposed bitcoin ETF
BlackRock, the world’s largest asset manager, has taken a significant step towards launching a bitcoin exchange-traded fund (ETF) in the US. The company announced that it has received $100,000 from an unnamed investor as “seed capital” for its proposed BlackRock Bitcoin Trust, which would track the performance of the leading cryptocurrency.
A bitcoin ETF is a type of investment product that would allow investors to gain exposure to the price movements of bitcoin without having to buy or store the digital asset directly. Instead, they would buy shares of the ETF, which would hold a pool of bitcoins on behalf of the investors. The ETF would trade on a regulated stock exchange, making it easier and cheaper for investors to access the bitcoin market.
BlackRock is not the first company to pursue a bitcoin ETF in the US. Several other firms, including VanEck, Valkyrie, and NYDIG, have filed applications with the Securities and Exchange Commission (SEC) to launch their own bitcoin ETFs. However, none of them have received approval from the regulator yet, as the SEC has expressed concerns about the potential for fraud, manipulation, and volatility in the bitcoin market.
BlackRock’s announcement suggests that the company is confident that it can overcome these regulatory hurdles and become the first to launch a bitcoin ETF in the US. The company has a strong reputation and track record in the ETF industry, managing over $9 trillion in assets across various funds. It also has experience in dealing with cryptocurrencies, as it offers two mutual funds that invest in bitcoin futures contracts.
The $100,000 seed capital is a symbolic amount that shows that BlackRock has secured at least one investor for its proposed bitcoin ETF. The company will need to raise more funds from other investors before it can launch the product. According to its filing with the SEC, the minimum investment amount for the BlackRock Bitcoin Trust is $50,000.
If BlackRock succeeds in launching a bitcoin ETF in the US, it could have a significant impact on the cryptocurrency market. A bitcoin ETF would provide a convenient and regulated way for institutional and retail investors to access bitcoin, potentially increasing the demand and liquidity for the digital asset. It could also boost the credibility and legitimacy of bitcoin as an alternative asset class, attracting more mainstream adoption and acceptance.
However, BlackRock’s use of a private trust to invest in Bitcoin is a novel and secretive approach, which could give it an edge over other institutional investors. By using a private trust, BlackRock can avoid the regulatory scrutiny and disclosure requirements that come with publicly traded products such as ETFs or trusts. Moreover, by using Coinbase as its custodian, BlackRock can benefit from the security and liquidity of one of the largest and most reputable crypto platforms in the world.
BlackRock’s private trust could also signal a growing demand for Bitcoin among institutional investors, who are looking for alternative ways to gain exposure to the cryptocurrency without dealing with the technical and regulatory challenges of owning it directly. As more institutions enter the Bitcoin market, the price and adoption of the cryptocurrency could increase significantly in the long term.