The biggest asset manager in the world is preparing to join the growing number of corporate players cashing in on the crypto boom.
According to a new SEC regulatory filing, BlackRock may soon be introducing cash-settled bitcoin futures contracts.
BlackRock, which has $7.8 trillion under management, filed prospectus documents on Wednesday for the BlackRock Global Allocation Fund and BlackRock Funds V, saying each could invest in derivatives that draw value from various financial instruments “including bitcoin,” Blockworks reports
Any bitcoin futures the funds can invest in must be cash-settled on Commodity Futures Trading Commission-registered commodity exchanges, according to the filings, which is limited to CME Group in the US.
BlackRock highlighted illiquidity, valuation and volatility challenges as potential risks in the filing. Bitcoin futures are so new they aren’t as heavily traded as other futures, it says, and the cash market in bitcoin has been the target of manipulation, according to Blockworks.
The funds are only permitted to trade cash-settled bitcoin futures, meaning the holder will receive a simple cash credit once the contract expires. Such settlements do not require physical delivery of the underlying asset, Markets Insider reports.
BlackRock CEO Larry Fink hinted at the company’s interest in bitcoin last month when he said it could “evolve into a global market asset.”
In November, Rick Rieder, the firm’s chief investment officer of global fixed income and head of the global allocation team, said bitcoin could rival gold “to a large extent” and that crypto is “here to stay.”
News of the company’s regulatory filing elicited an excited response in the crypto community.
The Block’s Frank Chapparo described BlackRock’s move as “massive news.” He also pointed out that CEO Larry Fink, like many of his corporate peers, hasn’t always viewed bitcoin positively.
He tweeted, “Larry Fink was among those titans of finance who hated on bitcoin in 2017. He once called it an ‘index of money laundering.'”
Prominent crypto statistician Willy Woo, who expects bitcoin to soar past the $200,000 price mark this year, tweeted with an accompanying price prediction chart, “BlackRock loves BTC, they manage the equivalent of 8% of world GDP. Bitcoin is 0.6% of world GDP in comparison. This is what happens to #Bitcoin price when the High Net Worth get that kind of validation to buy BTC.”
Corporate players and investors that have embraced bitcoin in the past year include Square, MicroStrategy, Grayscale, JPMorgan, Goldman Sachs, Fidelity, and Wall Street legends Stan Druckenmiller and Paul Tudor Jones.