BlackRock announces new bitcoin trust, sends small token up 35%

BlackRock (BLK) announced Thursday the launch of a private trust that will hold bitcoin and seek to track the asset’s performance, with Coinbase (COIN) serving as the trust's custodian.

The announcement comes one week after Coinbase disclosed a partnership with BlackRock to provide direct access to crypto starting with bitcoin on BlackRock’s investment platform, Aladdin.

BlackRock, which has aimed to position itself as a leader in environmental, social and governance (ESG) investing, acknowledged that despite bitcoin's high energy consumption, it is “encouraged that organizations such as RMI and Energy Web are developing programs to bring greater transparency to sustainable energy usage in bitcoin mining, and will follow progress around those initiatives.”

This mention sent Energy Web's EWT token up as much as 35% following the announcement.

Energy Web's lesser known token powers a blockchain designed for trading energy credits with a focus on decarbonization. EWT's market cap was standing north of $103 million as of Thursday afternoon.

BlackRock's private bitcoin trust will be available to the $10 trillion asset manager’s U.S. institutional clients, while Coinbase will serve as custodian over its bitcoin through its Prime product, according to the announcement. A BlackRock spokesperson declined to offer further comment.

“Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock stated in its release.

In March, BlackRock Chairman and CEO Larry Fink wrote in his letter to shareholders that the Ukraine-Russia war could potentially accelerate the use of digital currencies. Weeks later, BlackRock joined three other firms in investing $400 million into Circle, the issuer of stablecoin USDC.

Larry Fink, Chief Executive Officer of BlackRock, takes part in the Yahoo Finance All Markets Summit in New York, U.S., February 8, 2017. REUTERS/Lucas Jackson
Larry Fink, Chief Executive Officer of BlackRock, takes part in the Yahoo Finance All Markets Summit in New York, U.S., February 8, 2017. REUTERS/Lucas Jackson (Lucas Jackson / Reuters)

Noting four key areas, BlackRock added, “​​we see potential to benefit our clients and capital markets more broadly, including: permissioned blockchains, stablecoins, cryptoassets, and tokenization.”

The offering is a BlackRock client exclusive version of publicly available bitcoin trusts such as the Grayscale Bitcoin Trust (GBTC) and Osprey Bitcoin Trust (OBTC), which trade on over-the-counter markets. Unlike exchange traded funds, these trust's cannot continuously create and redeem shares, resulting in trust shares often trading at a discount or premium to bitcoin's open market price.

As of Thursday afternoon, bitcoin was trading near $24,300 per coin, up 7% in the last week but 49% below where it stood at the beginning of January.

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