BlackRock Visions A $5 Trillion Crypto Market by 2030

BlackRock, the world’s largest asset manager, has been progressively embedding itself into the cryptocurrency space, embracing a broader, transformative vision for the future of finance. The company’s moves are particularly noteworthy against the backdrop of the broader financial industry’s evolving stance on digital assets and the underlying blockchain technology.

BlackRock has not only been eyeing the cryptocurrency market but has also been actively participating in it, with significant investments. According to Market Realist, BlackRock has been preparing to offer cryptocurrency trading, leveraging its integrated investment management platform, Aladdin. This strategic direction aligns with the increasing interest and involvement of institutional investors in the cryptocurrency space​​.

$5 trillion crypto market by 2030

In addition to its trading initiatives, BlackRock had also filed a registration statement with the SEC in January 2022 for the iShares Blockchain and Tech ETF, aiming to track the investment results of an index composed of companies involved in the development, innovation, and utilization of blockchain and crypto technologies. While still awaiting SEC approval, it shows BlackRock is keen on integrating Bitcoin and blockchain into its investment strategies​​.

Let’s also not forget that BlackRock holds a stake in MicroStrategy, a company holding a substantial amount of Bitcoin as we reported today. BlackRock also holds investments in Bitcoin mining companies thus basically controlling the foundational elements of the cryptocurrency ecosystem.

BlackRock of course scored big time with their IBIT Spot Bitcoin ETF. This ETF provides investors with a more accessible and convenient way to invest in Bitcoin. The IBIT spot bitcoin ETF by BlackRock has amassed $15.5 billion in assets under management within three months, ranking among the fastest-growing ETFs in history.

BlackRock’s vision for a $5 trillion crypto market by 2030 seems not only ambitious but grounded in a series of strategic steps that could potentially catalyze broader institutional acceptance and integration of digital assets.

Tokenization, the next step in BlackRock’s vision

BlackRock has now filed for the launch of a tokenized private equity fund in collaboration with asset tokenization company Securitize Markets, LLC. Although the new fund’s details did not specify the cryptocurrencies or assets it would hold, news of its filing led to a 40% surge in the price of ondo coin, associated with Ondo Finance, a real-world assets tokenization platform.

Recently, a cryptocurrency named BlackRock USD institutional digital liquidity fund (BUIDL) surfaced on the Ethereum blockchain, indicating a transfer of $100 million on March 4 and holding just 100 coins with a single holder.

This will allow qualified investors to gain U.S. dollar returns by subscribing to the fund via Securitize Markets, LLC, aligning with BlackRock’s focus on tokenization within its digital assets strategy.

Tokenization will afford investors in BUIDL several key advantages, such as facilitating the issuance and trade of ownership on a blockchain, broadening access to on-chain investments, ensuring immediate and transparent settlement, and enabling asset transfers across platforms. The fund aims to maintain a stable token value of $1 and commits to distributing daily accrued dividends directly into investors’ wallets as new tokens each month. It plans to invest entirely in cash, U.S. Treasury securities, and repurchase agreements (repos), thus offering investors a return while they hold the token on the blockchain.

BUIDL permits 24/7/365 token transfers between pre-approved investors, offering flexibility in how tokens are held. Initial ecosystem participants include Anchorage Digital Bank NA, BitGo, Coinbase, Fireblocks, and other significant entities in the crypto sector.

BlackRock Financial Management Inc. will manage the fund’s investments, with the Bank of New York Mellon serving as the fund’s asset custodian and administrator. Securitize is set to manage token shares and handle fund subscriptions, redemptions, and distributions as the transfer agent and tokenization platform. Meanwhile, Securitize Markets is tasked as the placement agent to offer the fund to eligible investors.

PricewaterhouseCoopers LLP has been appointed as the fund’s accountant until December 31, 2024, underscoring the professional oversight and governance in place for BUIDL.

Banking sector to change drastically

The banking sector as we know it will change drastically under pressure of companies like BlackRock who believe in the tokenization of financial assets and the efficiency and transparency of blockchain. According to Sergey Gorbunov, founder of Axelar protocol, the tokenization of assets could significantly enhance financial institutions’ agility and innovation capabilities, driving crypto adoption forward.

Old-school banks have been slow to adapt to blockchain and tokenization, this reluctance stems from various factors. There is a natural resistance to change within established institutions, especially when it involves fundamentally altering longstanding operational processes. Additionally, regulatory concerns and compliance issues have created barriers to the adoption of blockchain and tokenization in banking. Moreover, the complexity and unfamiliarity of these technologies pose challenges for traditional banks in terms of integration and implementation.

You can conclude that the inertia of old-school banks in embracing blockchain and tokenization has hindered their ability to keep pace with the evolving landscape of the financial industry. The future is to those who can adapt swiftly, especially now.