In theory, putting digital versions of all assets, from stocks to real estate, on the blockchain can establish new markets and provide fast, round-the-clock transaction settlement.
Over the past year and a half, the price of Bitcoin has rebounded sharply, driving the performance recovery of cryptocurrency companies such as Coinbase. At the same time, it has also greatly benefited BlackRock, one of the most influential companies in traditional finance.
In January of this year, BlackRock launched the highly anticipated Bitcoin ETF, which allows investors to trade Bitcoin through regular brokerage accounts just like trading stocks. The fund has broken new ETF issuance records. Currently, the asset scale under management has reached about US$16.5 billion, making it the most prominent example of BlackRock's ability to combine its money management capabilities with the crypto market in the past three years.
According to media estimates, BlackRock's current digital asset business can generate about $88 million in revenue each year. This revenue mainly comes from fees charged by ETFs, fund management agreements with stablecoin issuer Circle, and a small blockchain trading fund launched earlier this year. Although this figure is small compared to BlackRock's overall consulting fee revenue of $13.7 billion last year, this revenue is expected to increase as the fund grows and the company launches more crypto products.
According to BlackRock's ambitious plans, the next step is to focus on transferring more traditional financial assets to the blockchain through tokenization, which is also its most challenging step. In theory, putting digital versions of all assets, from stocks to real estate, on the blockchain can establish new markets and provide fast, round-the-clock transaction settlement. However, like many other financial companies, BlackRock has yet to find a way to apply this technology on a large scale.
In October of last year, J.P. Morgan said that BlackRock and Barclays had used their Onyx blockchain to conduct a transaction involving tokenized shares in BlackRock's money market fund. Although the plan is still ongoing, BlackRock later decided to focus more on using public blockchains, such as Ethereum, as it is easier to attract users and activity.
Mitchnick, head of digital assets at BlackRock, said: “When we look back, we find that many of the industry's initial attempts were difficult to achieve substantial success on scale.”
In March of this year, BlackRock partnered with crypto startup Securitize to create a money market fund that can be traded on the Ethereum blockchain. BlackRock also led a $47 million investment in Securitize, and Joseph Chalom, head of its strategic ecosystem partnerships, joined the startup's board of directors. According to Etherscan data, as of May 1, the tokenized fund had attracted $385 million from 13 investors, which is much slower than the launch of BlackRock's hot ETF.
Editor/Somer