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BlackRock Trust: Crypto Legitimacy or Beginning of the End for Bitcoin?

After BlackRock, the world’s largest asset manager, announced on August 11 that it would launch a private bitcoin trust for its clients, some cryptocurrency enthusiasts said the move could legitimize the digital asset in the eyes of more traditional investors.

BlackRock’s new private trust will make bitcoin available to its institutional clients, tracking bitcoin’s performance, providing direct exposure to the cryptocurrency’s price and, of course, offering trading options.

This article is excerpted from The Node, CoinDesk’s daily roundup of the top stories in blockchain and crypto news. You can subscribe to receive the complete newsletter here.

“Despite the sharp decline in the digital asset market, we are still seeing significant interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in its press release.

The news comes shortly after the company announced a partnership with Coinbase to give users of its Aladdin platform access to cryptocurrency trading and custody services. This development highlights how traditional investors and institutions, from banks to hedge funds, are moving into the cryptocurrency market, indicating that the digital asset is here for the long haul.

These new approvals give cryptocurrencies increasing legitimacy, bringing digital assets into the more traditional financial sector and thus making them more accessible to new and old investors.

But does the advocacy of a multinational investment management company contradict everything that bitcoin originally stood for? Especially when just five years ago BlackRock CEO Larry Fink called bitcoin a “money laundering index”.

Bitcoin’s anarchic beginnings in 2009 heralded the potential democratization of finance. Blockchain technology has promised a more open and secure access to money for everyone. With bitcoin now part of Wall Street’s mainstream investment portfolio, has the leading cryptocurrency betrayed its revolutionary roots?

At the end of June, Coinbase shares were at an all-time low of $47.02. But the announcement of a partnership between BlackRock and Coinbase could be partially responsible for the recent upward trajectory of the cryptocurrency exchange’s share price.

But Coinbase shares are still down 75% from their peak, and online skeptics believe BlackRock’s partnership with Coinbase, once at the top of its game, is nothing more than a takeover by a centralized financial institution.

And with the added possibility of new regulations from the US Congress, the news further fuels fears that the current crypto winter may not be fleeting, but the beginning of the end for bitcoin.

As is always the case with the market, only time will tell.

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Thomas E.
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