‘Crypto could revolutionize finance’ BlackRock CEO

Larry Fink, CEO of BlackRock and previous skeptic of cryptocurrencies says Bitcoin can revolutionize finance, weeks after proposing a controversial Bitcoin ETF.

‘Crypto could revolutionize finance’ BlackRock CEO
Photo credit: Larry Fink; BlackRock | Design by Ifeoluwa Awowoye for Mariblock. 

Larry Fink, CEO of BlackRock, the world’s biggest asset manager drew parallels between Bitcoin and gold in an interview last Wednesday, saying Bitcoin is an international asset that is synonymous to digitizing gold.

The details    

  • Fink said that cryptocurrencies can revolutionize finance through the tokenization of assets and securities. 
  • According to him, BlackRock is trying to make crypto more democratized and cheaper for investors as it currently costs a lot to transact bitcoin. 
  • BlackRock filed for the Securities and Exchange Commission’s (SEC) approval of its Bitcoin ETF on the 15th of June 2023 and it is rumored to have contributed to the recent rise in Bitcoin’s price.
  • Having a strong track record with ETF approvals from the SEC, Fink stated that BlackRock is confident in a positive outcome.  
     

Key quote 

BlackRock CEO Larry Fink said: 
 

“We do believe if we can create more tokenization of assets and securities, and that’s what Bitcoin is, it could revolutionize finance. So, we look at this as an opportunity to move one step further in terms of providing investors with fractions of shares and democratizing the cost of investing.” 

He also added: 

“I was skeptical [about crypto] because it was heavily used for illicit activities and I think as it became more accessible …  I do believe that the role of crypto is digitizing gold in many ways, instead of investing in gold as a hedge against inflation or the devaluation of your currency.” 
 

Be smart

  • Similar to normal exchange traded funds, the Bitcoin ETF is simply an investment instrument that tracks the value and performance of Bitcoin.  
  • The Bitcoin ETF will be listed on traditional exchanges and it provides a medium for investors to gain exposure to Bitcoin without directly owning the digital asset.  

Worth noting 

  • Until recently, Larry Fink was known to be an open skeptic of crypto as he referred to Bitcoin as an index of money laundering back in 2017.  
  • Now his company’s interests in cryptocurrencies are solely for the basis of trading them like traditional assets within the same centralized structures Bitcoin was created to replace. 
  • Due to these facts, many crypto loyalists are worried that BlackRock might be interested in crypto for the wrong reasons.   
  • BlackRock’s first filing for the Bitcoin ETF was sent back by the SEC, who requested the company provide a surveillance partner to handle early fraud detection, a major concern of the SEC. 
  • It was after this directive that BlackRock chose Coinbase as the proposed custodian of the fund.  
  • However, the odds of approval do not seem completely favorable as Coinbase was recently sued by the SEC for allegedly violating US securities law by failing to register as a broker, national securities exchange or clearing agency. 

Big picture 

  • Fink’s statement on Bitcoin being an international asset and alternative to avoid currency devaluation is not a new reality in Africa, where unstable currencies are a norm.  
  • Validation from influential people like Fink and institutions such as BlackRock could go a long way in driving mass adoption and public consciousness of cryptocurrencies.  
  • Speaking on Larry Fink’s interview, Paul McCaffery, managing director of investment firm Keefe Bruyette and Woods, said “It’s a game-changer. His commentary was not about this being a good economic decision for BlackRock but rather about the promise of digital wealth.” 
  • As African legislators are well known for following the templates of Western nations in terms of cryptocurrency and blockchain regulation, the approval of this ETF could spur a chain reaction in Africa.