BlackRock Greenlights Two Associated Funds to Invest in Bitcoin

BlackRock, the world’s largest asset manager with almost $8 trillion in AUM, is allowing two of its biggest funds to engage in Bitcoin derivatives.

According to ‘additional information’ provided in prospectus documents filed with the SEC, BlackRock has added bitcoin futures to derivatives products that its two funds can invest in. BlackRock Global Allocation Fund Inc. and BlackRock Funds V are cleared to invest in commodities, currencies, interest rates, credit events or indices.

“The only bitcoin futures in which the Funds may invest are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC,” the asset manager said.

The company cited several risks for its possible involvement in Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term including regulatory changes, valuation issues and illiquidity risk as bitcoin futures are not as heavily traded as other futures and its 'market is relatively new'.

Moreover, BlackRock reminded its investors that Bitcoin exchanges have repeatedly experienced technical and operational issues, making bitcoin prices unavailable at many times. In addition, the asset manager further states that the No-1 cryptocurrency has been the target of fraud and manipulation, which 'could adversely impact' the performance of its funds.

The Chicago Mercantile Exchange (CME) is the only regulated marketplace in the US that offers Bitcoin contracts for cash settlement. This allows investors to take cash instead of physical delivery of Bitcoin upon settlement of the contract. Cboe offered similar derivatives back in 2017 but discontinued the offering of new contracts in 2019.

Although Bakkt, a cryptocurrency platform owned by the New York Stock Exchange owner, is also offering Bitcoin futures on a highly scrutinized US exchange, its product is for physical delivery.

The new development comes barely a month after CEO of BlackRock, Larry Fink, provided a somewhat bullish take on the world’s first cryptocurrency. In a relatively rare endorsement, Fink 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.

Back then, Fink, who has grown BlackRock into the world's largest money-management corporation, dismissed bitcoin as nothing more than a vehicle for speculation and money laundering.

Furthermore, BlackRock had been on the lookout for crypto talent in late 2020, having notably posted a job opening for a VP of Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term.