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BlackRock Gives 2 Funds Go-Ahead to Invest in Bitcoin Futures
The world's largest asset manager appears to be getting into the bitcoin game.
Por Danny Nelson
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BlackRock, the world's largest asset manager with $7.81 trillion under management, appears to have granted at least two of its funds the ability to invest in bitcoin futures.
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Prospectus documents filed with the U.S. Securities and Exchange Commission Wednesday indicate that BlackRock Global Allocation Fund Inc. and BlackRock Funds V are at least eyeing bitcoin. They both include the world's oldest cryptocurrency on their lists of derivative products cleared for use.
BlackRock did not state which commodity exchange it will choose to execute these crypto futures buys. However, the funds may only invest in cash-settled bitcoin futures. CME is the only exchange registered with the Commodity Futures Trading Commission (CFTC) that offers similar futures products at this time.
The filings warn that investments in these futures could carry illiquidity risks due to the "relatively new" market. Regulatory changes, volatility and valuation risks could similarly weigh on the price and thus "adversely impact a Fund."
The filings appear to mark BlackRock's entrance into the bitcoin market.
Before Wednesday, the investments giant has never so much as mentioned "bitcoin" in any of its regulatory filings. But that appears to be changing: "Certain Funds may engage in futures contracts based on bitcoin," the prospectus documents state.
Last November, the company's CIO for fixed income, Rick Rieder, told CNBC that cryptocurrency may be "here to stay," and could even replace gold "to a large extent," noting that it was "much more functional" than the yellow metal.
CEO Larry Fink even acknowledged bitcoin's rising popularity, saying it had potential to turn into a global market asset last year.
The asset manager also recently posted a job opening for a blockchain and crypto executive, seeking a vice president of blockchain for its New York office.
Candidates for the position should be able to create valuation models for cryptocurrencies, but also evaluate governance models and other aspects of the underlying technology, the posting said.
UPDATE (Jan. 20, 2021, 22:20 UTC): Updated with additional context.
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- BlackRock digital-assets chief Robert Mitchnick warned that heavy use of leverage in bitcoin derivatives is undermining the cryptocurrency’s appeal as a stable institutional portfolio hedge.
- Mitchnick said bitcoin’s fundamentals as a scarce, decentralized monetary asset remain strong, but its trading increasingly resembles a "levered NASDAQ," raising the bar for conservative investors to adopt it.
- He argued that exchange-traded funds like BlackRock’s iShares Bitcoin ETF are not the main source of volatility, pointing instead to perpetual futures platforms.
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