BlackRock's partnership with Coinbase shows that institutions are looking to buy the dip
(Kitco News) - Coinbase, the top U.S.-based cryptocurrency exchange, revealed on Thursday that it has partnered with BlackRock, the world's largest financial asset manager by AUM, to provide greater access to cryptocurrencies for institutional investors beginning with Bitcoin (BTC).
Through the agreement, users of Blackrock's Aladdin institutional investment platform will be able to sign up for Coinbase Prime to access crypto trading, custody, prime brokerage and reporting services.
This marks a major development for the cryptocurrency ecosystem, which has long sought adoption by institutions as part of its
This is a big deal. BlackRock has over $10 trillion under management, this partnership will enable access to #Bitcoin for some of the largest institutional investors in the world. https://t.co/nIHvxJQ0lD— David Marcus (@davidmarcus) August 4, 2022
Coinbase Prime is an institutional trading solution with a client list of 13,000 that is specifically tailored for entities such as hedge funds, financial institutions, asset allocators and corporate treasuries.
2022 saw the entrance of large institutional investors into the crypto ecosystem in record numbers as crypto evangelists like Michael Saylor preached about the benefits of Bitcoin and the value of holding it in a company's treasury.
The pullback over the past nine months has actually helped on the institutional adoption front as those who had felt like they missed the boat as BTC rallied to an all-time high of $68,789 now see its current price of $22,600 as a good entry point.
According to Joseph Chalom, global head of Strategic Ecosystem Partnerships at BlackRock, the firm's institutional clients "are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets."
Elaborating further, Chalom stated that "This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows for a whole portfolio view of risk across asset classes.[...] As the trusted partner enabling institutions to participate and transact in the cryptoeconomy, we are committed to pushing the industry forward and creating new access points as institutional crypto adoption continues to rapidly accelerate."
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This development highlights the move by traditional firms on Wall Street to expand deeper into the crypto ecosystem at a time when demand is low and retail investors are more worried about paying their steadily inflating bills.
According to the May disclosure of Coinbase's first quarter performance, institutional investors accounted for nearly three-quarters of the $309 billion in trading volume on the exchange.
The partnership is the latest step in a more expansive strategy by BlackRock to increase its presence in the digital asset arena. In April of this year, the firm participated in a $400 fundraising round for Circle Internet Financial Ltd., the issuer of the USD Coin (USDC) stablecoin, and is looking to serve as a primary manager of the stablecoin's cash reserves.