The American global investment management business established a partnership with Coinbase earlier this month in order to provide bitcoin trading services to its clients.
The largest asset manager in the world with $10 trillion in assets under management (AUM), BlackRock Inc. has introduced a spot bitcoin private trust that enables direct BTC exposure for its institutional clients according to a statement from the company.
The trust will monitor bitcoin’s performance and provide direct exposure to the price of the flagship cryptocurrency, the company stated.
“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets,” the company said.
The action was taken a week after cryptocurrency exchange Coinbase Global Inc (COIN.O) announced a collaboration with BlackRock to give institutional clients access to custody and trading services for cryptocurrencies.
The Coinbase Prime platform, which would be in charge of keeping track of the institution’s assets, would be the only place where clients of BlackRock would be able to physically interact with bitcoin under this partnership.
“Leveraging Coinbase’s comprehensive trading, custody, prime brokerage and reporting capabilities, common clients will be able to manage their bitcoin exposures alongside their public and private investments,” BlackRock said at the time of the announcement.
The custodial transfer of bitcoin will not be supported by BlackRock’s institutional bitcoin trust. But the trust’s worth will be determined by the spot price of bitcoin, and the asset manager will probably once more use a custodial partner.
Institutional investors who were originally against cryptocurrencies have altered their minds in recent years, but environmental issues related to bitcoin mining have remained a barrier for many.
BlackRock has been looking into topics including permissioned blockchains, stablecoins, cryptoassets, and tokenization that have the “potential to benefit our clients and the capital markets more broadly,” according to the post.
The most recent developments demonstrate how traditional organizations, including pension funds, hedge funds, and banks, have recently increased their investment in crypto assets, betting that the alternative asset class would continue to grow.