San Francisco-based Coinbase is to connect to Aladdin, BlackRock's investment technology platform, with bitcoin as the first of potentially a number of tokens to be made available through this venture to the global asset manager's clients.
In a blog on 4 August by Brett Tejpaul, head of Coinbase Institutional and Greg Tusar, vice president, Institutional Product, stated that "over the past few years, Coinbase has played a central role in developing and strengthening crypto markets as the safest, most trusted bridge to the cryptoeconomy.
"Today marks an exciting next step on our journey as we announce that Coinbase is partnering with BlackRock, the world's largest asset manager, to provide institutional clients of Aladdin®, BlackRock's end-to-end investment management platform, with direct access to crypto, starting with bitcoin, through connectivity with Coinbase Prime.
Coinbase Prime will provide crypto trading, custody, prime brokerage, and reporting capabilities to Aladdin's Institutional client base who are also clients of Coinbase.
Coinbase's clients include hedge funds, asset allocators, financial institutions, corporate treasuries and other institutions.
"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," said Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock.
"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."
BlackRock and Coinbase will continue to progress the platform integration and will roll out functionality in phases to interested clients.
Coinbase Prime is a leading institutional prime broker platform for crypto assets, with over 13,000 institutional clients.
Early reaction from the industry included Chris Terry, BPSAA Board Member and VP Enterprise Solutions at SmartFi, the US-based open lending platform, who said: "The recent news of the BlackRock deal with Coinbase is a good news for them, as it has been a rough ride the past year. I am not sure how much profit the BlackRock deal will add to the bottom line but from an optics standpoint it is important. It has been bad: regulatory uncertainty in the USA, sell off in crypto, Terra LUNA collapse, big exodus of the retail client base. I mean could it get any worse?
"The pundits love to say this is the end. It is not, in fact Bitcoin, Ethereum, Cardano, and other projects are all still here. I would say think of the last few months as industry cleansing. COIN was a good buy at $50. Since a lot of institutions are banned from buying cryptocurrency directly, COIN might be the only play for them. COIN is a broad proxy for the cypto market; from this point forward COIN and BTC will be a mirrored chart."
While Mikkel Mørch, executive director at Digital Asset Investment Fund ARK36, commented: "While small and retail investors have been virtually shaken out of the space over the past few months, institutions are now making a comeback. Evidently, big players like BlackRock see neither the recent slump in prices nor the waves of bankruptcies among crypto companies as evidence that it's over for cryptocurrencies or that there is something fundamentally wrong with this asset class."
"Because of a much longer investment horizon than retail, institutional investors aren't scared of short-term volatility and focus on the long-term growth the cryptocurrency market is bound to experience."
"Importantly, Coinbase's partnership with BlackRock provides yet another entry point for institutions to meaningfully engage with the crypto space. As the infrastructure for institutional investors to place their bets on digital assets grow, so will their involvement in this market. Crypto is simply inevitable at this point."
