BlackRock reveals key motivation behind launching crypto ETFs

BlackRock’s jump into the Bitcoin ETF world was all about what their clients wanted. Robert Mitchnick, the company’s head of digital assets, spilled the beans at the Bitcoin2024 event in Nashville. 

He chatted with Bloomberg’s James Seyffart, pointing out that the Bitcoin ETFs are still just starting to gain steam. “It’s early,” Robert said. But even at this early stage, client demand was a massive push. 

Interestingly, BlackRock’s CEO Larry Fink, who was once a big-time critic of crypto, has had a change of heart. As Cryptopolitan reported, Larry now calls Bitcoin “digital gold” and thinks it is a great asset to countries who are struggling economically.

According to Robert, Larry’s new outlook on crypto came from diving deep into the subject. Larry’s background in finance and geopolitics helped, but the real game-changer was the growing interest from clients and the solid institutional infrastructure around cryptos.

James highlighted the success of Bitcoin ETFs, noting that some of these have been among the most successful launches ever.

He mentioned that the iShares Bitcoin Trust (IBIT) has already made a big splash, contributing massively to BlackRock’s revenue this year. It’s now the firm’s second most successful product, only behind the SP 500 ETF.

Robert explained that while individual investors quickly jumped on board with the Bitcoin ETFs, wealth advisory and institutional investors are still playing catch-up. 

Big names like Morgan Stanley, UBS, and Merrill Lynch haven’t fully embraced Bitcoin ETFs yet. Robert thinks this will change soon, though, and expects a quicker uptake this year. 

He pointed out that BlackRock’s Registered Independent Advisers are starting to allocate around 2-3% of their funds to Bitcoin ETFs, showing a cautious but growing interest.

According to Robert, Bitcoin is still the top dog, with some interest in Ethereum, but that’s about it. He doesn’t see a boom in crypto ETFs beyond these two any time soon.

Even without full regulatory clarity, Bitcoin and Ether have found a solid place in the financial system.