Asset Manager BlackRock Partners With Coinbase, Will Offer Crypto to Institutional Clients

Updated by Ryan James
In Brief
  • BlackRock has partnered with Coinbase Global to allow its institutional client base to access crypto.
  • The collaboration will bridge BlackRock's Aladdin software tool set with Coinbase Prime.
  • For the money manager, the partnership comes on the back of increased institutional demand.
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BlackRock, one of the largest asset managers, has partnered with Coinbase Global to allow its institutional client base to access crypto while the latter gets an opportunity to reverse its slumping growth rate.

The collaboration will bridge Aladdin—BlackRock’s end-to-end investment management platform—with Coinbase Prime to allow institutional clients of BlackRock to have direct access to cryptocurrencies, starting with only Bitcoin for now.

The statement noted, “Coinbase Prime will provide crypto trading, custody, prime brokerage, and reporting capabilities to Aladdin’s Institutional client base who are also clients of Coinbase.”

New partnerships a push to Coinbase’s slumping growth

The news comes at a time when Coinbase’s faltering performance has reportedly hit its ranking in the top 10 digital-asset exchanges by volume worldwide. It has also ignited the growth rate of competitors like FTX and Binance as they continue expansion in the US and Europe. Meanwhile, rumors that the exchange might be facing a liquidity crisis had also recently gained steam on the back of its decision to suspend its affiliate program, further striking down Coinbase.

The shares of the largest US exchange also took a further hit when Cathie Wood, who is known to steadily accumulate undervalued Coinbase (COIN) shares decided to pull back following a Bloomberg report that stated Coinbase is under investigation by the U.S. Securities and Exchange Commission (SEC).

Ark’s daily trading showed that three Ark Investment Management funds sold slightly more than 1.41 million shares for a total of about $75 million after being the biggest cheerleader of the company post its Nasdaq listing.

Meanwhile, in the tough environment of a crypto market downturn, Faryar Shirzad, the chief policy officer at Coinbase, acknowledged in June in an interview that additional layoffs may occur in the future as part of a long-term strategy to “run the firm properly.” Notably, Coinbase has already fired more than 1,000 employees, which made up 18% of its staff, in the last few months.

Therefore, the new partnership could rejuvenate the exchange through Coinbase Prime’s advanced agency trading, custody, insurance, and staking, among other functions.

BlackRock reports increased crypto interest among institutions

Coinbase Prime, which is an institutional prime broker platform, is reported to be catering to around13,000 institutional clients.

For the money manager, the partnership comes on the back of increased institutional demand. Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock stated, “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets,”

“This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows for a whole portfolio view of risk across asset classes,” Chalom added.

CoinShares’ latest report also highlights a strong inflow in digital asset products for the month of July, signifying increased investment in crypto by institutions.

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