The World's Biggest Investment Firm Just Added Bitcoin to Its Primary Fund

Global investment manager BlackRock has filed paperwork with the US Securities and Exchange Commission (SEC), which would allow it to invest in cash-settled bitcoin futures.

The move would enable BlackRock to allocate a portion of its $15 billion Global Allocation Fund to the futures, which are traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC).

BlackRock is the world's largest investment firm with over $10 trillion in assets under management.

BlackRock had made headlines last year when it added Bitcoin futures to derivatives products that two of its funds can invest in.

BlackRock CEO Larry Fink had said bitcoin has "caught the attention" and could largely replace gold but warned of its growing popularity that has a real impact on the US dollar. Fink had previously given the crypto scene the cold shoulder. Five years ago, Fink called Bitcoin an "index of money laundering" and as recently as last month warned that most crypto firms will fold.

The addition of Bitcoin to the firm’s primary fund would be a significant move for the crypto industry, as it would imply that BlackRock could invest directly into the premier cryptocurrency. It's considered to be a bullish signal for the crypto industry and could signal towards the end of the current crypto winter.

Blockchain ETF

The world’s largest asset manager launched a blockchain-focused ETF in April that provides investors with exposure to the crypto and blockchain industry. The company added the Blockchain and Tech ETF (IBLC) to its iShares product line.

The addition of Bitcoin to the firm’s primary fund would be a significant move for the crypto industry, as it would imply that BlackRock could invest directly into the premier cryptocurrency

Other Crypto Partnerships

Despite Fink's hot and cold relationship with crypto, BlackRock has made a series of deals with the web3 industry. Last year, BlackRock inked a partnership deal with the prime brokerage arm of US popular exchange, Coinbase.

The collaboration is, however, limited to bitcoin and will allow BlackRock’s institutional clients to have access to crypto trading, custody, prime brokerage, and reporting via Coinbase Prime. The clients are also able to manage their bitcoin and conduct risk analysis using BlackRock’s software suite Aladdin.

BlackRock also participated in $400 million funding round for Boston-based fintech startup Circle. In addition to its investment and role as a primary asset manager of USDC cash reserves, BlackRock entered into a partnership with Circle to explore capital market applications for its stablecoin.

Global Outlook

In BlackRock's 2023 Global Outlook report, published in December, the firm warns that the year will bring a recession unlike those in the past. According to the report, this recession will be caused by policies aimed at controlling inflation by central banks, and will differ from previous downturns as loose monetary policy will not be used to support risk assets.

The report also predicts that equities will likely suffer more as they are not priced in for this recession, and that central banks will have to stop tightening policies before reaching their intended inflationary targets to avoid economic crises.

Furthermore, BlackRock predicts that the new economic configuration calls for new ways of facing markets, and doesn't see a return to conditions that will sustain a joint bull market in stocks and bonds like the one experienced in the past decade.

On crypto and blockchain, the asset manager said that blockchain technology will be important as a tool to help tokenize securities as part of next-generation markets, but most cryptocurrency companies may not survive the downfall of FTX.