The largest investment management firm in the world — BlackRock — has set up a working group to evaluate the investment potential of blockchain and cryptocurrency.
As of December 2017, the New York-based financial giant has $6.28 trillion of assets spread across equity, fixed income, cash management, alternative investment, real estate and advisory strategies.
Where BlackRock may be eyeing expansion into the emerging asset class, CEO Larry Fink told Reuters he fails to see “huge demand for cryptocurrencies”. Their underlying technology, however, may be of more value to the corporation — the financial executive adding “we are a big student of blockchain.”
Where Fink may dispute the place of cryptocurrency in his company’s portfolio, his cohort may leave him little say in the matter.
In a steadily institutionalizing landscape, a number of BlackRock’s direct competitors have disclosed large investments into cryptocurrency — perhaps the most recent example being “Hedge Fund King” multi-billionaire Steven Cohen, as reported July 15, 2018, by CryptoSlate.
Paraphrasing Fink’s comments, Anthony Pompliano pointed out that Fink may be making a multi-trillion dollar error of judgment:
BlackRock manages over $6 Trillion and CEO Larry Fink says clients have ZERO interest in crypto.
It is nearly impossible to believe 0.00% interest.
If they keep that attitude, BlackRock won’t be the largest asset manager in the world for long.
— Pomp ? (@APompliano) July 16, 2018
Fink’s stance is not unique and appears to be echoed amongst the older generation of investment gurus. In a vein similar to JP Morgan’s CEO Jamie Dimon, or business magnate Warren Buffet, Fink once described Bitcoin as a “very speculative instrument” used “for money laundering”.
According to the Los Angeles native, size matters. Stating that the only sound investment for a 30-year old is “100 percent equities” — a $30 trillion market in the USA alone — Fink suggests Bitcoin “is tiny in the scheme of financial markets.”
Given the cryptocurrency market’s projected rate of growth, such comments may lose relevance — fast. In a January 2018 survey by Thomson Reuters, roughly 80 of 400 financial institutions reported considering cryptocurrency trading in the coming financial year.
In closing, Neill Penney — Thomson Reuters Co-Head of Trading — stated:
“Cryptocurrency is still a relatively small part of the trading market, but this survey indicates this niche segment is starting to enter the mainstream of the financial services industry. This is a major change from a year ago.”
