Like many of its Wall Street peers, BlackRock, the world’s largest asset manager, has been slowly cozying up to crypto. However, the company has no plan whatsoever to launch an exchange-traded fund (ETF) for digital assets anytime soon, said CEO Larry Fink at the New York Times DealBook Conference in Manhattan on November 1, 2018.
More specifically, Fink said that BlackRock would rather wait for the industry to become “legitimate” before making any such move.
A Bitcoin ETF Can Be Problematic Unless the Industry Matures
Interestingly, Fink’s statement has come at a time when many in the crypto community are eagerly waiting for regulators to warm up to crypto ETFs with the hope that it will open the floodgates for institutional money to flow into the industry.
The U.S. Securities and Exchange Commission (SEC) has so far held firm against all efforts to convince it about the merits of multiple Bitcoin ETF applications. The regulatory body maintains that a rush decision on the matter wouldn’t be appropriate considering the “significant investor protection issues that need to be examined.”
However, Fink clarified that just because BlackRock is not interested in an ETF for crypto at the moment doesn’t imply that it will never happen.
“I wouldn’t say never, when it’s legitimate, yes,” he explained, adding:
“It will ultimately have to be backed by a government. I don’t sense that any government will allow that unless they have a sense of where that money’s going.”
As of December 2017, the net worth of assets under BlackRock’s management stood at a whopping $6.29 trillion, cementing its position as the largest asset manager in the world.
Bitcoin’s Anonymity Is Not a Virtue
Fink stretched that ETFs “ultimately” require government-backing, which is hard to achieve if the people at the helm of the state machinery are not convinced that the financial instrument seeking their approval won’t be used for illicit activities. This is where he raised the issue of Bitcoin’s anonymity — often deemed a virtue by crypto proponents, but actually a risk factor in Fink’s opinion.
He pointed out that it is easy to leverage Bitcoin’s anonymity to pursue illegal and unethical activities including tax evasion. Fink’s concern sounds legit considering that the digital currency made it easier for traders in dark web marketplaces to sell illicit goods and services including guns and drugs. Although, there is evidence that Bitcoin has lost much of its charm as the preferred digital currency on the dark web, especially in the wake of growing popularity of more privacy-centered coins such as Monero.
‘Huge Believer in Blockchain’
Fink towed along the line adopted by many Wall Street CEOs including J.P. Morgan’s Jamie Dimon and said that while BlackRock is somewhat skeptical about cryptocurrencies, the company is a “huge believer in blockchain.”
“The biggest use for blockchain will be in mortgages, mortgage applications, mortgage ownership, anything that’s labored with paper.”
On a related note, Fink’s remarks have come just ahead of the Nov 5 deadline set by the SEC to complete the review of proposed policy changes related to a series of pending Bitcoin ETF applications.