Coinbase and BlackRock crypto have teamed up
Institutional investors will now be able to manage and trade Bitcoin through Coinbase Global Inc.'s partnership with BlackRock Inc., bringing the world's largest asset manager into an industry ravaged by dropping prices and regulatory investigations.
In New York City, Coinbase jumped 15% to $92.61 at 1:20 pm. For the largest US crypto-trading platform, whose shares had lost more than two-thirds of their value this year by Wednesday, the deal with BlackRock brings some comfort.
According to a statement released Thursday, BlackRock's Aladdin investment-management system would be able to monitor its clients' exposure to Bitcoin and other portfolio assets like equities and bonds and assist financing and trading on the Coinbase exchange. In the beginning, "Bitcoin will be the emphasis" of the partnership with Coinbase, the largest US cryptocurrency trading platform, BlackRock said.
Why BlackRock chose Coinbase as their crypto partner
Even after this year's crisis in crypto assets, BlackRock's action extends Wall Street's traditional financial players' involvement in crypto and associated technology. As a result of the collapse of the Terra ecosystem and hedge fund Three Arrows Capital, questions have arisen regarding the stability of the market and heightened regulatory monitoring.
It is being investigated by the US Securities and Exchange Commission (SEC) if Coinbase allowed Americans to exchange digital assets that should have been classified as securities.
Because of Coinbase's size and prominence in the market, as well as its involvement in trading, custody, prime brokerage, and reporting, BlackRock decided to work with them. Both companies' customers will be able to use the services.
According to an analyst at Oppenheimer & Co. who has the equivalent of a "buy" rating on Coinbase shares, the regulatory risks from the cooperation are manageable because it starts with Bitcoin rather than other digital assets.
Lau said in a phone interview that the alliance "validates the future of blockchain and digital assets and also validates Coinbase's credibility." "It's a huge win for the industry and Coinbase," says a spokesperson.
According to an analyst at Oppenheimer & Co. who has the equivalent of a "buy" rating on Coinbase shares, the regulatory risks from the cooperation are manageable because it starts with Bitcoin rather than other digital assets. This news makes sophisticated investors more comfortable with the crypto market.
Coinbase reported that institutional investors made up nearly three-quarters of the first quarter's $309 billion in trading volume. There are hedge funds, corporate treasuries, and asset managers on Coinbase's client list.
The agreement is the next logical step in BlackRock's plan to increase its digital asset holdings. Stablecoins and digital assets are becoming increasingly important, according to CEO Larry Fink, who stated this in March.
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