The reason why Blackrock has supported cryptos for almost a decade

Robbie Michnick, head of digital assets at BlackRock, shared insights into the firm's crypto strategy. BlackRock is developing its approach more than many realize.

Michnick discusses BlackRock's journey, Bitcoin as an asset, ETFs and the future of digital assets.

Long road to public adoption

Michnik notes that BlackRock's interest in crypto began in 2016, although the company did not consider the asset class “ready for prime time” at the time. This marked the beginning of BlackRock's crypto journey, quietly building capacity before making large public moves.

“The evolution really started to accelerate in the 2021-2022 time frame. There were three key drivers behind this change: The infrastructure around the system began to mature. The growing recognition that crypto is here to stay; A sustainable customer trend with increasing demand for the space,” said Michnik.

Since this change, BlackRock's involvement in crypto has increased, notably with the launch of Bitcoin and Ethereum ETFs, which Ryan Sean Adams described as a “Christmas miracle.” Education has played a key role in BlackRock's strategy, as the organization aims to introduce a largely crypto-naive audience to the space.

Michnik emphasized the importance of combating misunderstandings, such as the notion that Bitcoin is an “at risk” asset. While Bitcoin is considered risky, riskier assets are typically favored during bull markets. The confusion surrounding Bitcoin as “digital gold” has led to misconceptions among newcomers.

“If you look at Silicon Valley Bank and the regional bank crisis in March 2023, that's probably the most obvious example of Bitcoin working as a hedge. The main reason it stood out was because the crypto research community didn't have time to get complicated, Michnick explained.

BlackRock's focus on education is essential to changing these attitudes. In fast-moving markets, implicit beliefs can quickly shape market behavior.

Michnik also mentioned that BlackRock will soon release an expose on risk to their broader customer base, noting that Bitcoin tends to be favored by traders and Ethereum by developers. As for the possibility of a third ETF being approved, he doesn't see a clear front at the moment.

Future in Tokenization?

Michnick touched on BlackRock's view of tokenization as the idea of ​​”blockchain, not bitcoin” fades away, dragging out “tokenization, not bitcoin.” Although the long-term viability of the token is uncertain, BlackRock is building the necessary infrastructure to support it.

Our strategy is to provide customers with cheap and easy access to these markets and provide technological capabilities. It would be surprising if we only have seven tokenized funds in 10 years. Chances are we won't have any or much at all,” Michnick said.

BlackRock's strategic approach reflects the firm's commitment to both long-term viability and learning. As more clients show interest, BlackRock is positioning itself as a leader in providing accessible digital asset investments.

While the future of tokenization and ETFs is uncertain, BlackRock's strategy suggests that the firm will remain a significant player in the industry no matter what changes.