Shalini Nagarajan

BlackRock chief Larry Fink highlighted the financial headway taking place in some countries other than the US, which appears to be falling behind in comparison.



In an <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter" target="_blank" rel="noreferrer noopener">annual letter</a> to investors published Wednesday, Fink wrote about rising interest in the digital assets space over the past year, even though bankrupt crypto exchange FTX really captured the spotlight.



He called attention to faster and more efficient payments in India, Brazil and parts of Africa. India’s <a href="https://www.npci.org.in/what-we-do/upi/product-overview" target="_blank" rel="noreferrer noopener">United Payments Interface</a> (UPI), a type of instant-real time payment system, has become a roaring success as it is now one of the most widely-used forms of payment in the country. A similar system in Brazil called <a href="https://business.ebanx.com/en/resources/payments-explained/pix-instant-payment-system" target="_blank" rel="noreferrer noopener">Pix</a> has evolved the way locals pay.&nbsp;



“By contrast, many developed markets, including the US, are lagging behind in innovation, leaving the cost of payments much higher,” he said.



Fink oversees the world’s largest asset manager, which has nearly $8 trillion in assets under management. And he believes the asset management industry is yet to utilize some of the most promising technologies in the digital asset space.&nbsp;



Specifically, the tokenization of assets is an attractive use case for the BlackRock CEO because it points to chances of “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”



He said BlackRock continues to explore the digital assets ecosystem, with a special focus on aspects that would drive the most value to clients, like permissioned blockchains and tokenization of stocks and bonds.&nbsp;



Other prominent financial institutions like Goldman Sachs, Hamilton Lane and Siemens have already piqued investor interest by undertaking their own distinct <a href="https://blockworks.co/news/2023-year-of-asset-tokenization">asset tokenization projects</a>. In fact, Hong Kong’s government tapped Goldman Sachs’ tokenization protocol to issue its first tokenized green bond.



This isn’t the first time Fink vocalized his thoughts about the potential of asset tokenization. He <a href="https://blockworks.co/news/blackrock-ceo-still-in-crypto-for-the-tech-despite-ftx-scandal">addressed</a> the FTX blow-up at the New York Times DealBook Summit in December, saying there were “some misbehavior of major consequences.” And despite the pitfalls associated with the collapse, he said the tech around cryptocurrencies will be “very important” going forward.&nbsp;



“I believe the next generation for markets and next generation for securities will be tokenization of securities,” he said then.



Fink acknowledged that participating in the digital assets industry doesn’t come without risks, and said there is a clear need for regulation in the market as it is yet to fully mature.



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BlackRock CEO Touts Tokenization, Warns US ‘Lagging’ in Innovation

BlackRock chief executive Larry Fink says he still sees promise in cryptocurrency’s underlying technology despite everything that happened with FTX.



The billionaire money manager touched on the FTX scandal at the <a href="https://www.youtube.com/watch?v=PSVpth7uqb4" target="_blank" rel="noreferrer noopener">New York Times DealBook Summit</a> on Wednesday. “I actually believe most of the [crypto] companies are not going to be around,” Fink said.



BlackRock, the world’s largest asset manager overseeing some $8 trillion, had previously invested $24 million in FTX through a fund of funds. Fink noted Sam Bankman-Fried’s firm may have misled investors.



&#8220;We&#8217;re going to have to wait to see how this all plays out…I mean, right now, we can make all the judgment calls. It looks like there were some misbehaviors of major consequences,” Fink said.



FTX’s valuation shot to <a href="https://blockworks.co/news/ftx-valued-at-32-billion" target="_blank" rel="noreferrer noopener">$32 billion</a> at the start of the year, having raised funds across <a href="https://www.crunchbase.com/search/funding_rounds/field/organizations/funding_total/ftx-exchange" target="_blank" rel="noreferrer noopener">seven venture capital rounds</a> starting from 2018 per Crunchbase, including a meme-bound Series B-1 worth $420 million last October. 



All that quickly crumbled earlier this month after a debilitating $6 billion bankrun triggered by concerns of shallow liquidity and gross mismanagement. FTX is now undergoing bankruptcy proceedings, and the latest figures show it owes $3.1 billion to its 50 largest creditors with up to a million users out-of-pocket. 



Former CEO Sam Bankman-Fried said at the DealBook Summit that he <a href="https://blockworks.co/news/bankman-fried-underestimated-collapse" target="_blank" rel="noreferrer noopener">didn’t intentionally commit fraud</a>, and he was “frankly surprised” at how big Alameda’s position was in his exchange’s native token, FTT — a reference to its leaked balance sheet that surfaced about two weeks before its demise.



Fink reasoned that FTX issuing its own cryptocurrency, especially without appropriately disclosing its own balances, ultimately led to its downfall.



Major venture capital firms <a href="https://blockworks.co/news/crypto-vcs-sequoia-multicoin-reckon-with-failing-ftx-investments" target="_blank" rel="noreferrer noopener">Sequoia</a> and <a href="https://blockworks.co/news/singapore-central-bank-defends-red-flagging-binance-ftx" target="_blank" rel="noreferrer noopener">Temasek</a> were among those exposed to the embattled exchange. Sequoia had been vocally enthusiastic about Bankman-Fried, once <a href="https://www.ft.com/content/67b1899f-4b1f-4676-b264-0d19e205d64e?shareType=nongift" target="_blank" rel="noreferrer noopener">saying</a> in a now-deleted blog that his intellect was “as awesome as it is intimidating.” 



Both Temasek and Sequoia have since marked their FTX equity down to zero, while the Ontario Teachers&#8217; Pension Fund <a href="https://blockworks.co/news/ontario-teachers-fund-sank-95m-in-failed-ftx-empire" target="_blank" rel="noreferrer noopener">plans</a> to do the same with its own $95 million investment.



Despite problems surrounding the collapsed exchange, Fink — once a crypto skeptic — said the tech powering it will be “very important,” harking back to the “blockchain, not Bitcoin” mantra heard across Wall Street in cycles past.



&#8220;I believe the next generation for markets and next generation for securities will be tokenization of securities,” Fink said.&nbsp;



There have indeed been novel and important developments in this area of late, with major institutions <a href="https://blockworks.co/news/jpmorgan-trade-on-public-blockchain-monumental-step-for-defi" target="_blank" rel="noreferrer noopener">dabbling</a> in trading tokenized securities and <a href="https://www.eib.org/en/press/all/2021-141-european-investment-bank-eib-issues-its-first-ever-digital-bond-on-a-public-blockchain" target="_blank" rel="noreferrer noopener">bonds</a> on public, reasonably decentralized blockchains.&nbsp;



On-chain <a href="https://blockworks.co/news/can-defi-handle-new-wave-of-users" target="_blank" rel="noreferrer noopener">decentralized exchanges</a> are indeed increasingly successful, but blockchain-powered traditional markets may still be a ways off. The Australian Securities Exchange earlier this month <a href="https://blockworks.co/news/blockchain-not-bitcoin-is-dead-australian-bourse-cans-dlt-shift" target="_blank" rel="noreferrer noopener">canned</a> its $170 million project to transform its settlement layer into a blockchain-powered system after more than three years of development. 



Consulting giant Accenture found the shift untenable due to the distributed ledger’s high latency.



David Canellis contributed reporting.



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BlackRock CEO Still in Crypto for the Tech Despite FTX Scandal

Ben Strack

<div id="highlights-block_6269632617680" class="highlights">
 <ul>
 <li>Leveraging blockchain technology for payments, contracts and consumption represents crypto’s “broader opportunity,” company says</li>
 <li>Launch comes after Fidelity listed its crypto and metaverse ETFs last week</li>
 </ul>
 
</div>



BlackRock has launched its blockchain ETF and labeled the segment a “megatrend” just days after competitor Fidelity brought to market a similar fund.&nbsp;



The world’s largest asset manager, which manages roughly $10 trillion in assets, added the iShares Blockchain and Tech ETF (IBLC) to its megatrends product suite on Wednesday.



BlackRock’s thematic platform alone comprises 43 products with more than $50 billion in assets under management.



“The expansion of our megatrends line-up today reflects the power of the millennial and rise of the self-directed investor, whose buying habits have reshaped mainstream consumer behaviors, and in turn, the companies in which they invest,” Rachel Aguirre, BlackRock’s head of US iShares product, said in a statement.



<a href="https://www.blackrock.com/ae/intermediaries/products/326614/ishares-blockchain-and-tech-etf?switchLocale=y&amp;siteEntryPassthrough=true" target="_blank" rel="noreferrer noopener">IBLC</a>, which the firm <a href="https://cms.blockworks.co/blackrock-files-for-crypto-etf/" target="_blank" rel="noreferrer noopener">filed for in January</a>, seeks exposure to global companies at the forefront of the “development, innovation and utilization” of blockchain and crypto technologies, according to the company. It does not invest in cryptocurrencies directly. 



The new blockchain fund launched about a week after <a href="https://cms.blockworks.co/fidelity-launches-metaverse-experience-in-tandem-with-new-etfs/" target="_blank" rel="noreferrer noopener">Fidelity listed</a> its Crypto Industry and Digital Payments ETF (FDIG) and its Metaverse ETF (FMET). Both funds carry an expense ratio of 39 basis points. 



The BlackRock product, which costs 47 basis points, currently has 34 holdings. Its largest allocations are to crypto exchange Coinbase, as well as bitcoin miners Marathon Digital and Riot Blockchain, which each account for more than 10% of the portfolio.



Other top holdings include Galaxy Digital, IBM, Hive Blockchain Technologies, Bitfarms and PayPal.&nbsp;



In tandem with the ETF launch, BlackRock published a <a href="https://www.ishares.com/us/strategies/megatrends/three-permanent-transformations-driving-growth" target="_blank" rel="noreferrer noopener">paper</a> highlighting three areas experiencing significant permanent changes: new consumer, industrial renaissance and medical breakthroughs.



<blockquote class="wp-block-quote">“While most of the market attention has focused on the price and volatility of cryptocurrencies themselves, we believe the broader opportunity — leveraging blockchain technology for payments, contracts and consumption broadly — has not yet been priced in,” the paper states. </blockquote>



Cryptoassets offer financial inclusion to the unbanked and allow users to regain control over the $150 billion annual market for their personal data, according to the paper. BlackRock’s research also highlights central bank digital currencies (CBDCs), noting that 87 countries are currently exploring them.



A BlackRock spokesperson declined to comment further on its plans within the crypto space.&nbsp;



Larry Fink, the company’s CEO, <a href="https://cms.blockworks.co/blackrock-ceo-ukraine-war-could-speed-digital-currency-adoption/" target="_blank" rel="noreferrer noopener">said in a shareholder letter</a> last month that the war in Ukraine could accelerate the adoption of digital currency.



BlackRock and Fidelity <a href="https://cms.blockworks.co/blackrock-fidelity-back-usdc-issuer-in-400m-raise/" target="_blank" rel="noreferrer noopener">participated in a funding round</a> for peer-to-peer payments technology company Circle earlier this month.



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BlackRock Lists Blockchain ETF Days After Similar Fidelity Launch

<div id="highlights-block_623c8b835f87a" class="highlights">
 <ul>
 <li>A global digital payment system can enhance the settlement of international transactions and reduce the risk of money laundering, Fink said in a shareholder letter </li>
 <li>The company filed to launch a blockchain ETF in January</li>
 </ul>
 
</div>



The war in Ukraine could accelerate the adoption of digital currency, according to the CEO of the world’s largest asset manager. 



BlackRock CEO Larry Fink wrote in a shareholder letter published Thursday that Russia’s “brutal attack” on Ukraine has had, and will continue to have, a range of ramifications on the world.&nbsp;



Though several governments were already looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate, Fink said, the war will prompt countries to re-evaluate their currency dependencies.



<blockquote class="wp-block-quote">&#8220;A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption,” he wrote. “Digital currencies can also help bring down costs of cross-border payments, for example when expatriate workers send earnings back to their families.&#8221;</blockquote>



Fink said that due to increased interest from clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies. US government agencies are also researching various parts of the crypto space following <a href="https://cms.blockworks.co/whos-in-charge-of-what-breaking-down-the-crypto-executive-order/" target="_blank" rel="noreferrer noopener">President Biden’s executive order</a> earlier this month focused on the “responsible development” of digital assets. 



A BlackRock spokesperson declined to comment about future crypto-related products and services the company could look to offer.



BlackRock’s CEO has sent mixed messages on crypto over the past year.&nbsp;



Fink said during an interview with CNBC in October that he believes there is <a href="https://cms.blockworks.co/blackrock-ceo-sees-huge-opportunities-in-digital-currency/" target="_blank" rel="noreferrer noopener">“a huge role for a digitized currency”</a> and noted that his firm was learning about the blockchain and crypto sectors. He said at the time, however, that he is “probably more in the Jamie Dimon camp.”



Dimon, the CEO of JPMorgan Chase, called bitcoin “worthless” that month during a virtual event held by the Institute of International Finance.&nbsp;



Fink had said during an earnings call last April that investors worldwide, such as pension funds, insurance companies and registered investment advisers, were <a href="https://cms.blockworks.co/blackrock-ceo-clients-not-asking-about-crypto/" target="_blank" rel="noreferrer noopener">showing little interest</a> in the space.



But BlackRock, which manages $10 trillion in assets, began allowing its Strategic Income Opportunities and Global Allocation mutual funds <a href="https://cms.blockworks.co/which-mutual-funds-etfs-are-making-crypto-related-investments/" target="_blank" rel="noreferrer noopener">to invest in cash-settled bitcoin futures</a> in January 2021. 



More recently, the company filed with the Securities and Exchange Commission (SEC) in January <a href="https://cms.blockworks.co/blackrock-files-for-crypto-etf/" target="_blank" rel="noreferrer noopener">to launch the iShares Blockchain and Tech ETF</a>. 



The fund would track an index comprising companies involved in the development and deployment of crypto technologies in the US and abroad.



The <a href="https://www.sec.gov/Archives/edgar/data/1100663/000119312522014777/d286885d485apos.htm" target="_blank" rel="noreferrer noopener">initial Jan. 21 disclosure</a> proposed for the ETF to become effective 75 days after the filing, signaling a potential launch next month.



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BlackRock CEO: Ukraine War Could Speed Digital Currency Adoption

<div id="highlights-block_616707f5a643b" class="highlights">
 <ul>
 <li>Despite touting crypto’s potential, Fink said he is “probably more in the Jamie Dimon camp” after JPMorgan Chase CEO called bitcoin worthless </li>
 <li>Fink says he believes inflation is more than transitory </li>
 </ul>
 
</div>



The CEO of BlackRock, the world’s largest asset manager, said that while he sees “huge opportunities” for digital currency, he is unsure how the crypto space will fare over the long term.&nbsp;&nbsp;



“I’m not a student of bitcoin and where it’s going to go, so I can’t tell you whether it’s going to go to $80,000 or zero, but I do believe there’s a huge role for a digitized currency and I believe that’s going to help consumers worldwide,” Larry Fink, CEO, BlackRock, <a href="https://www.cnbc.com/2021/10/13/blackrocks-larry-fink-sees-higher-highs-in-stocks-after-we-get-through-some-issues.html" target="_blank" rel="noreferrer noopener">said</a> in an interview on CNBC Wednesday morning. “Whether it’s bitcoin or something else or more of a governmental official digital dollar, that will play out.”



Though Fink said he is fascinated by interest in the space and that his firm is studying the blockchain and crypto sectors, he noted during the interview that he is “probably more in the Jamie Dimon camp.”



Dimon, the CEO of JPMorgan Chase, called bitcoin “worthless” on Monday during a virtual event held by the Institute of International Finance.&nbsp;



“It makes no difference to me — I don’t think you should smoke cigarettes either,” Dimon added. “Our clients are adults. They disagree. That’s what makes markets.”



Dimon noted that though his company can’t custody it, it can give “as clean as possible” access to the asset class. JPMorgan reportedly told its advisors in a memo in July that they could begin <a href="https://cms.blockworks.co/jpmorgan-reportedly-to-allow-clients-to-access-crypto-funds/" target="_blank" rel="noreferrer noopener">buying and selling five crypto funds</a> on behalf of a wealth management client.



Fink had said that month that the pension funds, insurance companies, and registered investment advisers BlackRock speaks to are not inquiring much about crypto.



A BlackRock spokesperson declined to comment about whether the firm has any product plans or other initiatives in the works related to crypto.&nbsp;&nbsp;



<h3>Inflation not transitory, BlackRock CEO says</h3>



A day before Fink’s comments about crypto to CNBC, the CEO said at the Institute of International Finance event that he doesn’t believe inflation is transitory.&nbsp;



Federal Reserve Chairman Jerome Powell <a href="https://cms.blockworks.co/powell-tapering-might-begin-this-year-rate-hike-far-off/" target="_blank" rel="noreferrer noopener">has said repeatedly in recent months</a> that inflation is elevated mainly due to transitory factors.



<blockquote class="wp-block-quote">“I’m not calling for stagflation — I don’t see any evidence of that — but do I see persistence in inflation? Yes,” Fink explained. “I think it’s more than transitory related to supply-chain issues and commodity prices.”</blockquote>



Fink added that the Covid-19 economy accelerated the rise of the gig economy as workers are looking for more flexible working conditions with better pay and benefits.&nbsp;



More than four million people left their jobs in August, according to the Department of Labor’s Job Openings and Labor Turnover Survey released Tuesday.



“I do believe the dominance of the gig economy is playing real havoc in how one thinks about jobs,” he said, and so all these issues mean to me the traditional economies are going to have to raise wages quite considerably.”



While crypto is viewed by many as a hedge against inflation, BlackRock executives did not mention crypto on its third-quarter earnings call on Wednesday morning.&nbsp;



BlackRock President Rob Kapito said some clients are increasing allocations to various alternatives from 1% to up to 20%. Fink added that some are allocating more to equities and those in fixed income can move to lower-duration or inflation-protected products.



“I don’t think there’s one global trend of going in and out of one product because [there are] inflationary fears and some clients don’t believe in that,” Fink said. “Some people actually believe it’s transitory.”



A survey of fund managers representing about $400 billion in assets under management — <a href="https://cms.blockworks.co/coinshares-survey-ethereum-most-compelling-for-growth/" target="_blank" rel="noreferrer noopener">published by CoinShares</a> earlier this month — found that about 56% believe inflation is permanent, with 44% thinking it is transitory.

BlackRock CEO Sees ‘Huge Opportunities’ in Digital Currency

<div id="highlights-block_60ef46ea113eb" class="highlights">
 <ul>
 <li>Larry Fink said areas such as crypto and “meme stocks” are unrelated to BlackRock’s mission</li>
 <li>Comments come after the CEO said in April that bitcoin and other cryptocurrencies were fascinating and “may be a great asset class” in the future</li>
 </ul>
 
</div>



The leader of the world’s largest asset manager said Wednesday that the firm’s clients, who are focused primarily on building returns over the long term, are not asking about cryptocurrencies.



BlackRock CEO Larry Fink grouped crypto with so-called “meme stocks” during an interview on CNBC. Industry watchers often consider such stocks to include those that see sudden and dramatic surges due to social media hype, such as <a href="https://www.ft.com/content/afa3c119-3393-4d17-9174-ae19bae31123" target="_blank" rel="noreferrer noopener">AMC Entertainment and GameStop</a>.



He noted that such investments are unrelated to his firm’s mission, adding that it is important to improve financial literacy for people to look beyond speculating on just a few stocks, as well as the ups and downs of the market.



“In my last two weeks of business travel, not one question has been asked about [crypto],” Fink told CNBC. “That is just not part of the focus on retirement and long-term investors, and we see very little in terms of investor demand on those types of things, but quite frankly they may not come to BlackRock for that type of demand.”



Though Fink said the pension funds, insurance companies, and registered investment advisers BlackRock speaks to are not inquiring much about crypto, industry watchers have pointed to growing demand among institutional investors.&nbsp;



Ninety-eight percent of hedge funds <a href="https://cms.blockworks.co/survey-1-in-6-hedge-funds-plan-to-invest-in-crypto-in-5-years/" target="_blank" rel="noreferrer noopener">expect to invest</a> in cryptocurrencies in some capacity in the next five years, a recent survey by fund administrator Intertrust Group found. Goldman Sachs <a href="https://cms.blockworks.co/goldman-sachs-teams-with-galaxy-to-meet-institutional-digital-asset-demand/" target="_blank" rel="noreferrer noopener">partnered with Galaxy Digital</a> last month in a move Galaxy’s co-president said would help the bank meet the increasing demand from institutions and pave the way to broader adoption of cryptocurrencies as an asset class.



The BlackRock CEO’s comments doubled down on those made by Fink during the company’s previous earnings call in April. He said at that time that though BlackRock was “fascinated” by bitcoin and would explore how it could create crypto-related products if demand among its clients increased, investors worldwide were not asking the firm how it fits in their portfolio.



In terms of trends, BlackRock has focused on ESG in recent years, launching sustainable ETFs and other funds, as well as building out its ESG data and analytics offerings.&nbsp;



“I believe the opportunity there is so much larger than how is a crypto asset a long-term asset,” Fink said in April. “I don&#8217;t want to diminish anything related to crypto and digital ideas. &#8230;I think it is going to be an asset class. We&#8217;ll see how it performs over the long term, and it may be a great asset class, but let&#8217;s wait and see.&#8221;



Analysts asked BlackRock executives about topics such as SMAs, ETFs and organic growth during the company’s second-quarter earnings call on Wednesday, but did not inquire about specific efforts in the crypto space.