BlackRock Partners With Coinbase to Make Crypto Directly Available for Institutional Investors
- The asset management firm will leverage Coinbase prime to provide this service.
- Following the announcement, COIN shares have spiked more than 21 percent today to trade around $98.36.
On Thursday, the world’s largest money manager, BlackRock Inc. (NYSE: BLK), announced a collaboration with the popular crypto exchange Coinbase Global Inc. (NASDAQ: COIN). The partnership will give BlackRock’s institutional investors direct access to their crypto portfolio. However, those investors would also need to own cryptos on Coinbase before they can access the tool (known as Aladdin) to use for this purpose.
BlackRock Selects Coinbase
According to the asset management firm’s blog post, investors can use Aladdin to perform crypto custody, prime brokerage, and crypto trading. The tool also has reporting capabilities. BlackRock’s head of strategic ecosystem partnerships, Joseph Chalom, stated that the company’s institutional clients have become more interested in having more exposure to the crypto market.
“Our 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,” Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said in a statement. The partnership will let them “manage their bitcoin exposures directly in their existing portfolio management and trading workflows.”
However, they want more focus on managing the operational lifecycle of their crypto assets effectively. “Our institutional clients can use the Aladdin tool to manage the bitcoin exposures in their current portfolio directly.” They can also use it to trade workflows for an entire portfolio of asset classes once they analyze the risks involved.
BlackRock’s clients will access the Aladdin tool using Coinbase prime. Coinbase prime is an integrated solution that offers secure custody and an advanced trading platform for most institutional investors to manage their crypto assets. More than 13,000 institutional clients currently use Coinbase prime, and it supports custody for over 300 digital assets.
Reportedly, the firm’s partners will continue improving the platform integration and launch additional functionalities as needed. The partnership is happening four months after Larry Fink (BlackRock’s CEO) said the company is already exploring ways to provide crypto exposure for its clients.
During that march 2022 interview, Fink said many of its institutional investors had been persistently demanding such service from BlackRock. In April 2022, BlackRock and a group of other investors became the primary manager of the cash reserves for Circle’s USDC stablecoin. This new partnership is the next logical step for BlackRock as it seeks to explore the digital asset space further.
This collaboration is one of the few positives Coinbase has enjoyed this year. The major drop in crypto prices, regulatory pressures, and stronger competition has caused the exchange to struggle this year. Coinbase has also had to deal with security and litigation issues. Recently its wallet was the target of a multi-layered phishing campaign.
The popular exchange is facing allegations of violating US securities laws. US regulators claim the exchange listed many cryptos it should have registered as securities. Hence, it might use this partnership to revive its dwindling fortunes and possibly be the catalyst for a rebound in the broader crypto space.
In an email comment, Coinbase president, Emillie Choi, assured investors of transparency in their crypto investment. He said the combination of BlackRock’s experience in investment management technology and Coinbase’s proprietary trading tools would make this happen.
Coinbase’s vice president of institutional product, Greg Tusar, said the firm remains committed to creating progressive pathways for the industry, especially as more institutional investors are becoming more interested in crypto adoption.