WORLD’S LARGEST ASSET MANAGER PREDICTS BLOCKCHAIN WILL REVOLUTIONIZE FINANCE
WORLD’S LARGEST ASSET MANAGER PREDICTS BLOCKCHAIN WILL REVOLUTIONIZE FINANCE
(Sounds very familiar to us...)
We stand on the launchpad of a revolution in financial products, underpinned by blockchain technology. At its core, blockchain technology holds the power to digitalize commerce and transactions, greatly improve the world’s financial services, and offers the potential to tokenize monies, commodities, and assets.
But don’t ask us – ask Larry Fink, CEO of BlackRock, the world’s largest asset manager.
Blockchain Coinvestors Investment Thesis
While current market fluctuations have led some in the US to question the pace of blockchain adoption and its ultimate utility, we remain convinced in our investment thesis:
Digital monies, commodities, and assets are inevitable and all of the world’s financial infrastructure must be upgraded.
Today we believe it's essential to look beyond immediate uncertainties and focus on long-term trends and potential value creation. Every early-stage investor knows that getting ahead of powerful and inevitable tailwinds is the best way to capture superior returns, and right now it could not be any clearer that the world’s leaders are coming around to the inevitable future we have been describing for a decade.
In newsletter vol. 5 no.5 we showed how most of the world’s financial centers were onboard and preparing. Now, as we outline below, we have the CEO of the world’s largest asset manager aligned as well.
On our side, we are doubling down on the potential of natively digital finance with the launch of our seventh fund which builds on the track record of one of the top performing fund of funds in the world.
Please click here to book an introductory meeting and learn about the upcoming upgrade of our global financial system and how to invest in and capitalize upon it.
BlackRock Prepares for Natively Digital Finance
We were happily surprised that this past week we heard the CEO of the world’s largest asset manager articulate our investment thesis on a national stage – both in an announcement from his company and in interviews he gave on public television.
BlackRock recently submitted an application for a Bitcoin ETF, a move that took many by surprise given the context of market downturns and recent SEC lawsuits against blockchain industry players.
BlackRock's record of successful ETF applications speaks volumes – out of 576 applications, an impressive 575 have been approved by the SEC. ETFs are a juggernaut in the asset management business, that began when our own Managing Partners, Alison and Matthew, worked with Barclays Global Investors to launch iShares and the ‘ETF for everyone’ movement.
This move by Blackrock to request a spot bitcoin ETF was not lost on other industry giants, with the likes of Bitwise, Fidelity, Invesco, VanEck, and WisdomTree quickly following suit, revising their existing applications or submitting new ones.
Source: Fox Business
The question then is, what does BlackRock see that makes them join Bitwise, Invesco, and others in what to date has been a frustrating approval process – the SEC preferring to approve bitcoin futures ETFs, while turning down more efficient spot market based products (futures products have additional layers of cost and run the risk of contago)?
We gained further insight from Larry Fink's recent interview with Fox Business where Fink’s comments were strikingly aligned with our own investment thesis.
When asked about the Bitcoin ETF application, Fink acknowledged BlackRocks’s belief in the "digitization of products" and “that if we can create more tokenization of assets and securities, and that’s what bitcoin is, it could revolutionize finance.”
Fink further solidified his commitment to blockchain technology, stating, "I believe the underlying technology is fantastic, the blockchain will help you accelerate the process of transactions… we don't need custodians anymore, the whole process of finance, intermediaries are broken down... it's an advancement of technology."
We encourage our LP network to watch the full interview here.
Seven Important Implications
These statements from Fink bring seven key implications:
As one of Wall Street's titans, Fink's public endorsement of blockchain was undoubtedly calculated. It implies that BlackRock believes blockchain technology and digital assets are here to stay.
BlackRock has always been a leader in driving consumer benefit in asset management and Larry Fink emphasizes that he believes blockchain will bring enormous consumer benefit.
Fink’s comments carry weight in the industry and his backing should pave the way for other financial executives to accelerate blockchain adoption and for portfolio managers to allocate capital to the industry.
Given BlackRock's successful ETF application track record, it's reasonable to believe they are confident in a positive outcome for their Bitcoin ETF application and long-term prospects for the industry.
BlackRock is adding to its history of adopting and capitalizing on innovation in financial services – something we know all too well at Blockchain Coinvestors (more on that below).
An approved US-based Bitcoin ETF would significantly increase access to bitcoin, offering anyone with a brokerage account the ability to buy into the BlackRock ETF.
BlackRock's proactive approach signals a valuable lesson for other investors: seize the opportunities presented by the current market downturn and the value creation that is being unlocked by the continued digitalization of commerce.
We’ve Been Here Before: Passively Managed ETFs
The financial services sector, specifically the asset management segment, has already experienced a revolution over the past two decades. This transformation was largely driven by the rise of Exchange-Traded Funds (ETFs). These financial instruments provided passively managed, cost-effective solutions to retail investors, enabling asset managers to considerably reduce fees.
Our team was instrumental in this revolution. First our Managing Partners Alison Davis and Matthew Le Merle worked with Barclays Global Investors (BGI) to establish growth strategies of which retail ETF’s were one plank. Then, Alison assumed the role of CFO and Head of Strategy in 2000 with responsibility to work with Lee Kranefuss and the iShares team to incubate and launch the new low-cost ETF business. The promise of offering lower-cost products composed of high-quality assets to retail investors held immense potential and today iShares manages more AUM than any other family of financial products.
The consumer benefit was also immense – it is hard to imagine today, but back when this started, Mutual Funds charged as much as 3% loads and heavy annual management fees too.
In 2009, BlackRock acquired BGI, in a large part for the iShares business. Larry Fink, like us, saw what is once again apparent – technology and innovation can bring enormous consumer benefits and must be embraced rather than resisted. Now, as the world's largest asset manager, BlackRock is very publicly leaning into blockchain technology.
The View from London
Fink's recent comments and BlackRock's actions underscore our long-held belief: investing into downturns fosters superior returns. During the previous blockchain bull run, BlackRock was on the sidelines as new industry entrants captured market share and created immense value. Now, they aim to be at the center of the next wave of financial digitalization.
As investors, our strategy remains resilient – investing into the downturn. Historical data suggests that venture returns peak in the years following a recession, and that early-stage investments outperform all other asset classes. This period of economic uncertainty provides a chance to be a part of the next wave of blockchain adoption, and we are committed to capturing the opportunity.
Want to learn more? Our portfolio comprises 750+ blockchain companies and projects, including 70+ blockchain unicorns. Our investor team will be in London, Los Angeles, New York, Paris, San Francisco, Singapore, and Zurich over the coming months for founder and LP meetings. We would love to meet you – click here to book an introductory call and to schedule an in-person meeting.
Thank you for reading.
Best,
Mitch Mechigian
Partner, London
ABOUT BLOCKCHAIN COINVESTORS
Blockchain Coinvestors is the best way to invest in blockchain businesses. Our vision is that digital monies, commodities, and assets are inevitable and all of the world’s financial infrastructure must be upgraded. Our mission is to provide broad coverage of early stage blockchain investments and access to emerging blockchain unicorns. Blockchain Coinvestors’ investment strategies are now in their 10th year and are backed by 400+ investors globally. To date we have invested in 40+ pure play blockchain venture capital funds in the Americas, Asia, and Europe and in a combined portfolio of 750+ blockchain companies and projects including 75+ blockchain unicorns. Blockchain Coinvestors’ first fund of funds ranks in the top decile amongst all funds in its category on both Pitchbook and Preqin. Headquartered in San Francisco with a presence in London, New York, Grand Cayman, Zug and Zurich, the alternative investment management firm was co-founded by Alison Davis and Matthew Le Merle.
"The best way to invest in Blockchain businesses"