BlackRock CEO Lary Fink stated that while his company still considers trading crypto assets at some point that time is not now as the industry still needs to mature.
BlackRock, the world's largest asset manager, is avoiding a bitcoin ETF until cryptocurrencies become “legitimate.” https://t.co/DFpaSHo0ag
— CNBC (@CNBC) November 1, 2018
BlackRock is the largest asset management firm in the world with almost $6.5 trillion in assets. In an interview with CNBC, Lary Fink confirmed that the company is not dismissing crypto investments and products but they are not prepared to enter the cryptospace right now, because it’s not “legitimate” yet.
“It will ultimately have to be backed by a government. I don’t sense that any government will allow that unless they have a sense of where that money’s going for tax evasion and all of these other issues.”
, Fink said. He also clarified:
“I do see one day where we could have electronic trading for a currency that could be a store of wealth,” but right now the world doesn’t need a store of wealth unless you need that store of wealth for things you should not be doing.”
Regarding legitimacy, it’s worth mentioning the Securities and Exchange Commission (SEC) has also shown restraint regarding a Bitcoin ETF and is yet to approve any of the numerous applicatios they received so far. The SEC has repeatedly postponed their decision to allow any of the applicants to launch a Bitcoin ETF.
Should Bitcoin receive further regulation, chances are ETFs will be granted approval and investor confidence will grow as well.
The BlackRock CEO considers that soe backing from the government is crucial for the asset to get the needed legitimacy for future growth. However, the main problem is governments will only allow it when they see it’s not mainly used for tax evasion.
In July, Fink participated in an interview on Bloomberg TV where he was asked if the rumors about his company working on a crypto-based project are valid. He said:
“No, I mean we’re looking at… blockchain technologies. We’re studying them [cryptocurrencies] to see how they are performing.”
He was also asked about the interest of BlackRock’s clients in having some crypto exposure, Fink replied:
“No, I don’t believe that any client has sought out crypto exposure… When it becomes more legitimatized… that you identify who the players are on both sides… that’s probably when we’ll look at it as an alternative to all currencies.”
While Fink’s caution is understandable, other large institutions gave entered the cryptospace during the past few months such as Yale, and Fidelity Financial, for example.
When it comes to government backing, there seems to be a growing effort in regulating cryptos worldwide. India seems confident in the blockchain but shies away from crypto while other countries like Malta, Singapore, and Gibraltar are all developing rigorous regulatory frameworks to attract the best investors.
The U.S. regulatory framework for cryptocurrencies still needs work but companies such as Gemini and Bakkt are doing everything in their power for that to happen. The two companies are collaborating with established Wall Street entities to create a more secure environment and raise the degree of trust in cryptocurrencies.