The Coinbase platform announced a partnership with asset manager Blackrock, which will allow its institutional clients to buy and sell bitcoins. Blackrock’s institutional clients (banks, cash managers, hedge funds, etc.) who were already using Coinbase will now be able to access the platform’s Prime professional service to trade in bitcoin. They can get there via Aladdin, a software suite developed by Blackrock.
The partnership offers Coinbase a breath of fresh air, in a difficult context, the platform announced in mid-June the loss of 18% of its workforce, or around 1,100 positions
Blackrock Partners with Coinbase to Develop Cryptocurrencies with Institutional Investors.
Headlines about corporate bankruptcies and runs in the cryptocurrency industry have declined noticeably in recent weeks, and the flurry of negative news in May and June has given way to a period of calm.
Many experts believe that the bulk of the clean-up of a sector that had seen exaggerated growth in recent times has already been done. Yet, others warn that further negative developments are to be expected which will eventually trigger a new correction. But in this time of relative calm, news of the Coinbase-BlackRock deal seems to have reignited institutional interest in the crypto space.
BlackRock, the world’s largest asset manager, announces that it has selected Coinbase as a partner to develop cryptocurrencies with its institutional clients.
The giant BlackRock, which crossed 10 trillion dollars in assets at the start of the year, will allow its customer to take advantage of Aladdin to have access to Bitcoin (BTC) through Coinbase Prime, the Coinbase system also intended for institutions.
Aladdin is an internationally recognized artificial intelligence system developed by BlackRock that helps deal with market volatility and uncertainty through continuous data analysis.
Following the partnership, Aladdin customers will be able to monitor their exposure to Bitcoin at the same time as their bonds and their shares, further proof of the interest of traditional financial players in cryptocurrencies and more generally in new technologies.
According to Joseph Chalom, Head of Strategic Partnerships at BlackRock, this is also a result of growing demand from the asset manager’s clients:
“Our institutional clients increasingly want exposure to digital asset markets and are focused on how to effectively manage the operational lifecycle of these assets. This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly within their existing portfolio management and trading flows, for a holistic view of risk across all asset classes”
The news comes in the middle of the bearish market, the outcome of which seems difficult to predict. The latter has also cost Coinbase dearly, which has seen a decrease of 3/4 of its market capitalization since the beginning of this year. Already in June, the company had to part with a thousand of its employees in anticipation of the difficulties to come.
Institutions to The Rescue of the Market
The Coinbase Prime service currently serves more than 13,000 institutional-only customers, giving them access to a wide range of services to support the entire transaction lifecycle, including offering them an advanced trading system as an asset custody service, data, analytics, and staking offering.
According to Coinbase, institutions accounted for 3/4 of the platform’s trading volume during the first quarter of the year, including asset managers and corporate treasuries.
As for BlackRock, last April the company had already participated in a $400 million financing round with Circle to evaluate the possibilities of using the USDC in the capital markets, in addition to its role as cash manager.
Following the announcement of its partnership with BlackRock, the Coinbase share value soared by around 15%, to 92.66 dollars at the start of the New York session.
Big players like BlackRock do not view the recent price crash or wave of bankruptcies among cryptocurrencies as proof that this is the end for cryptocurrencies or that there is something fundamentally wrong with the asset class.
Due to a much longer investment horizon than retail, institutional investors are not afraid of short-term volatility and focus on the long-term growth that the cryptocurrency market is bound to experience.
Another notable aspect of this alliance is that Coinbase’s partnership with BlackRock provides another entry point. for institutions to meaningfully engage in the crypto space. As the infrastructure for institutional investors to place access digital assets grows, so will their participation in this market. Cryptocurrencies are just inevitable at this point.
