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BlackRock, the world’s largest asset manager, with over $8.7 trillion in assets under management in January 2021 is “dabbling” into bitcoin. According to Rick Rieder, Chief Investment Officer at BlackRock Asset Management, the Asset Manager has its eyes on bitcoin after a double filing with the U.S. Securities and Exchange Commission (SEC). While it does not come as a surprise with many investors now looking for alternative ways to store value, the potential effect of their involvement on the bitcoin and cryptocurrency world is at least noteworthy.
Last month, the firm has filed with the SEC for two of its funds to invest in bitcoin futures.
Wednesday morning during an interview on CNBC’s Squawk Box, Rieder commented on the filing. He said the asset management giant is exploring cryptocurrency. He did however not specify on what that would mean for its operations.
According to Rieder, interest in bitcoin is growing as people are looking for alternative ways to store and secure value. He said:
“Today the volatility of it is extraordinary, but listen, people are looking for storehouses of value. People are looking for places that could appreciate under the assumption that inflation moves higher and that debts are building, so we’ve started to dabble a bit into it.”
And added:
“My sense is the technology has evolved and the regulation has evolved to the point where a number of people find it should be part of the portfolio, so that’s what’s driving the price up”
Rieder also said that BlackRock is not yet making any recommendations on cryptocurrency, but given that many are holding cash in reserve, it makes sense to allocate some of that cash to cryptocurrencies. He nonetheless remained skeptical of the popular theory that everyone should at least put one percent of their assets into bitcoin:
“I wouldn’t put a number on the percentage allocation one should have, depends on what the rest of your portfolio looks like,” he said.
The two filings, one for BlackRock Funds V and the other for BlackRock Global Allocation Fund, Inc. include similar language that refers to bitcoin futures. They both read: “Certain Funds may engage in futures contracts based on bitcoin.”
The filings also point to risk that must be considered. It is noted that: “Regulatory changes or actions may alter the nature of an investment in bitcoin futures or restrict the use of bitcoin or the operations of the bitcoin network or exchanges on which bitcoin trades in a manner that adversely affects the price of bitcoin futures, which could adversely impact a fund.”
BlackRock added that the only bitcoin futures the funds can invest in are cash-settled bitcoin futures traded on commodity exchanges registered with the CFTC.