It wasn’t too long ago that BlackRock’s frontman, Larry Fink, was one of the most prominent crypto sceptics, labelling Bitcoin an “index of money laundering.” Fast forward to today, and BlackRock acknowledges the growing popularity of cryptocurrency in investment portfolios, particularly among the millennial high-net-worth (HNW) demographic.
This shift is evidenced by their subsidiary iShares, which has expanded BlackRock’s Exchange Traded Funds (ETF) offerings, as well as their collaboration with Coinbase, one of the largest crypto exchanges in the U.S., demonstrating a real desire to provide innovative investment products that meet expectations of the growing demand for crypto investments. It is undeniable that ETFs offer an ease of access entry into crypto holdings that reduces the learning curve associated with traditional holdings, this approach minimises risks and allows even the most non-digital-native client to benefit from the crypto boom!
How (ETF’s) are Rocking the Crypto World?
ETF’s offers a streamlined investment vehicle for entering the crypto world without the need to navigate the complexities of securing cryptocurrency assets directly. This approach opens the Bitcoin market to both institutional and retail investors, allowing them to participate without the usual challenges of private key management or securing digital wallets. In the world of retail investing, making products easy to understand and access is key, and this is precisely what ETF’s provides. Wrapping Bitcoin in a familiar, traditional investment structure helps demystify crypto for investors who may have otherwise hesitated due to the inherent risks and technicalities associated with holding cryptocurrencies directly.
What is key to the success of this approach?
- Making the Unfamiliar Familiar – We are all creatures of habit and all find intrinsic security in what we know and have observed to be successful vehicles be this in the investment sense or the broader societal sense the new disruptive innovation will always find greater adoption when wrapped in a familiar outward facing package. BlackRock IBIT ETF has done this marvellously reporting Assets under management (AUM) of 54 Billion Dollars by the end of December 2024, contributing to the all-time high of Bitcoin reaching $108,000.
- Spot Positions Approach – Spot positions unlike future positions contribute to the overall value of the asset held and as such the fund is a contributor to the rise in bitcoin price hikes and a long-term benefactor rather than a short-term speculator.
Moneybrain Corporate, a VASP-approved business operating out of Jersey British Isles, offers a partner-based custodian solution for familiar offices and investment firms holding crypto assets and an on-ramp off-ramp Fiat rail supported by our BIPS Stablecoins.
Moneybrain Jargon Buster
HNW (High-Net-Worth) – Refers to individuals with substantial financial assets available for investment, often defined as having at least $1 million in liquid assets.
ETF (Exchange-Traded Fund) – An investment fund traded on stock exchanges, much like stocks. ETFs can hold various assets, including stocks, bonds, or commodities.
Spot Positions – Refers to the purchase of an asset for immediate delivery and ownership, as opposed to derivatives like futures contracts.
Future Positions – Financial contracts obligating the buyer to purchase or the seller to sell an asset at a predetermined future date and price.
Private Key – In cryptocurrency, private keys are critical for accessing and managing funds in a digital wallet. Mismanagement can result in loss of funds.
On-Ramp/Off-Ramp – Mechanisms for converting traditional currency (fiat) into cryptocurrency (on-ramp) or converting cryptocurrency back into fiat (off-ramp).
VASP (Virtual Asset Service Provider) – A business providing services like crypto exchange or wallet management, often requiring regulatory approval.AUM (Assets Under Management) – The total market value of investments managed by a financial institution, fund, or investment firm.