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Will Crypto be a ‘Great Asset Class’?

Blackrock: Cryptocurrency could become a ‘Great Asset Class’

Blackrock CEO says that he is fascinated by cryptocurrency, believing that it could become a “great asset class.” But he said that Blackrock hasn’t received many inquiries from its institutional clients about having bitcoin in their portfolios.

After Coinbase’s IPO via a direct listing on Nasdaq, Blackrock CEO Larry Fink was asked whether his view on cryptocurrency has changed. Blackrock is the world’s biggest asset manager, with over $8.7 trillion in assets under management.

“I’m still fascinated about it,” he began. “I’m encouraged by how many people are focusing on it. I’m encouraged about the narrative. It may become a great asset class.” He highlighted, “I do believe this could become a great asset class, cryptocurrency.” However, he noted: “I don’t believe it’s a substitute for currencies. I think we are going to have cryptocurrencies of dollars, cryptocurrencies of other currencies.”

The Blackrock CEO amplified:

“I don’t believe we should think about crypto as a substitute for currencies. I am fascinated by it as an asset class.”

He clarified: “I am still watching … We are investing in it … We are studying it. We made money on it.” Nonetheless, he revealed: “Our investors worldwide, we don’t have that much inquiry on it.”

Fink has been particularly asked if Blackrock’s institutional clients are asking him about Bitcoin and cryptocurrencies about having some exposure in their portfolios, for that is the narrative that the market has been focusing on, including the valuation of Coinbase.

“We are not having those conversations,” he asserted, but quickly added that “maybe they are talking to somebody else.” He cleared up: “I don’t want to suggest that we have perfect information but our broad base client relationships, we have had very little interconnectivity on the conversation on crypto other than a fascination.”

He further added: “The amount of conversation we are having on climate risk and how they can navigate their portfolios is a major component of the conversation. The conversation about deficits and the conversation we are having on inflation risk is far more dominant for our clients worldwide than the whole conversation about crypto.”

The Blackrock executive continued: “We didn’t have any conversations around Reddit and Gamestop and what does that mean with our clients either, and yet it represents a major component of the markets. It’s fascinating to watch.”

In closure, Fink said:

“So, I do believe there is component of the financial markets about crypto that is real, that is growing. But, if you’re asking specifically about long-term investing, from sovereign wealth funds, from pension funds, from retirement services, from big family offices, the conversation about crypto is a very minor conversation compared to other conversations.”

Last year in November, Blackrock Chief Investment Officer of Global Fixed Income Rick Rieder stated that “cryptocurrency is here to stay” and Bitcoin can replace gold. In December, Fink stated that Bitcoin makes the US dollar even less relevant, noting that the cryptocurrency could evolve into a global market. Blackrock then revealed last February that it had started investing in Bitcoin.

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