The time of uncertainty and danger for the embattled cryptocurrency exchange Coinbase has passed. BlackRock Inc. is forming a partnership with Coinbase Global Inc. to make it simpler for big money investors to handle and trade Bitcoin. The partnership will put the world’s largest asset manager, BlackRock, into a market battered by plummeting prices and government investigations.
According to a new blog post published on Thursday, if BlackRock clients opt to join Coinbase Prime, they will be eligible for crypto trading, custody, prime brokerage, and reporting services.
Coinbase Prime is a digital assets management platform that includes trading, custody, prime financing, staking, data, and reporting services for over 300 cryptocurrencies. The service is designed for investors such as hedge funds, asset allocators, and financial organizations like banks and corporations. Over 13,000 users use Coinbase Prime.
Coinbase partners with BlackRock for crypto market expansion
At 1:20 p.m., in New York, COIN rose 15 percent to $92.61. The partnership with BlackRock gives the main US crypto-trading platform some relief, having lost more than two-thirds of its value this year through Wednesday.
BlackRock will allow its Aladdin investment-management system to be used by BlackRock customers to manage their Bitcoin exposure. This is in addition to other portfolio assets such as equities, bonds, and ETFs, as well as the ease of funding and trading on the exchange. BlackRock said that their focus with the crypto exchange will initially be on Bitcoin.
BlackRock’s entrance deepens the involvement of Wall Street’s traditional financial players in crypto and related technologies, even after this year’s crash in cryptocurrencies. Bitcoin has lost about half its value in 2022.
Furthermore, the collapse of the Terra ecosystem and hedge fund Three Arrows Capital has generated concerns about the market’s resilience and necessitated increased regulatory attention. Regarding the development, Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said:
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.
Joseph Chalom
The crypto exchange has had several regulatory challenges recently. Last month, a former Coinbase manager was arrested in the United States on insider trading charges. However, the former manager has since pleaded not guilty. Meanwhile, the US Securities and Exchange Commission is investigating whether Coinbase permitted users to trade unregistered securities.
BlackRock chose to work with Coinbase because of its market dominance and role in providing trading, custody, prime brokerage and reporting services. Clients from both firms will have access to the services.
The partnership’s regulatory, operational ground
The partnership’s regulatory challenges are manageable because it begins with Bitcoin, which has a clearer regulatory status in Washington than other digital assets. The news suggests that sophisticated investors are becoming increasingly comfortable with the crypto market.
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.
Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock
Coinbase said in May that institutional investors made up roughly three-quarters of the $309 billion in trading volume during the first quarter. Corporate treasuries, hedge funds, and asset managers are among Coinbase’s clients.
COIN price surges past 35%
The partnership with the crypto exchange is the next stage in a broader plan to expand into digital assets for BlackRock. Larry Fink, the company’s CEO, stated in March that it was investigating how to utilize growing confidence in cryptocurrency and stablecoins to aid clients.
In April, the firm committed to join a group of investors in Circle Internet Financial, the issuer of USD Coin. It announced that it would seek to serve as a primary manager for the stablecoin’s cash reserves.
The good news has positively influenced COIN, the Coinbase native currency, which is up 17% and is currently valued at $93.18. Investors’ expectations for Coinbase’s new deal with BlackRock were raised as high as 35% earlier today, suggesting a bright future for the crypto exchange.
The token dropped significantly after it experienced a slew of issues, including the broad cryptocurrency market crash and recession. During the typical market problems, the exchange was also briefly involved in bankruptcy rumors, which impacted the price of its native currency, $COIN.
Coinbase’s COIN is breaking 35% and previously reached 40%, reaching an ATH of $106. Coinbase’s partnership with BlackRock has a lot of advantages, not the least of which is that it allows the exchange to offer a broader range of services.
In the opening hour of trading, more than 25 million shares of Coinbase were traded, significantly exceeding the stock’s usual daily volume of 15 million shares. After the close on Tuesday, the firm is scheduled to release second-quarter earnings.
With the start of the crypto bear market, Coinbase’s stock has dropped more than 60% thus far. As rival Binance.US launched zero-fee bitcoin trading, shares plummeted in late June. After Robinhood announced quarterly earnings results that included a sequential rise in crypto income earlier this week, Coinbase began to recover some losses.
