The global leader in asset management and the US leader in cryptocurrency trading are teaming up to offer crypto-asset quotes to institutional clients. Good news for the struggling crypto platform this year.
Coinbase shares jump 32%
The stock jumped on Wednesday after leading US cryptocurrency platform Coinbase announced a partnership with BlackRock, the world’s largest asset manager with $10 billion in assets. The title jumped 32% during the day, causing the temporary halt in trading. It was up 15% at the end of the European session.
The two companies have partnered to develop crypto asset listings for institutional investors. This is a small revolution for the asset management sector, which has so far been reluctant to deal with crypto-currencies. For the crypto world, this is a sign that institutionalization continues.
Coinbase has created an institutional crypto investment platform called Coinbase Prime. BlackRock’s “Aladdin” clients will be able to use the platform, which offers premium brokerage, custody, trading and reporting services, similar to what the exchange offers its own institutional clients.
BlackRock customers can now access bitcoin through Coinbase Prime. Joseph Chalom, Head of Ecosystem Strategic Partnerships at BlackRock, commented on the connection: “This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly within their existing portfolio management and trading workflows, for a complete view of the risk on asset classes.”
Both the crypto industry and traditional financial institutions have benefited from the partnership between BlackRock and Coinbase. In February, it was announced that BlackRock would allow its institutional clients to trade cryptocurrencies.
BlackRock CEO Larry Fink even said he was interested in bitcoin and cryptocurrencies, believing they have the potential to become a good class of investment.
Interests like between Blackrock and Coinbase
At the start of the year, the giant BlackRock fund reached $10 trillion in assets. They will allow their customers to use Aladdin through Coinbase Prime, which is Coinbase’s system for institutions, to access the Bitcoin (BTC) market.
BlackRock developed Aladdin as an artificial intelligence system that uses continuous data analysis to help deal with market uncertainty and volatility. The system is well known around the world.
Aladdin is software that monitors Bitcoin exposure as well as holdings and bonds. This is proof that traditional financial entities are interested in cryptocurrencies and other new technologies.
Coinbase’s market cap has shrunk by 75% since the start of this year, leading the company to lay off 1,000 of its employees in June. The news comes at a difficult time for the crypto market, as the bear market is still ongoing. It is difficult to predict what will happen in the near future despite this announcement.
During the first quarter of the year, 3 out of 4 trading volumes on Coinbase came from institutions, including corporate treasuries and asset managers.
Last April, BlackRock partnered with Circle for a funding round of around $400 million. They are going to use the USDC as a cash manager and in the capital markets.
Not long ago, BlackRock created an exchange-traded fund (ETF) focused on blockchain technology, cryptocurrencies, and tech companies. 11.45% of the fund is allocated to Coinbase, which could explain some of this support shown by BlackRock to Coinbase.