iShares caves and launches blockchain ETF
iShares, one of the final holdouts, has well and truly joined the crypto trend, launching a blockchain ETF across European exchanges.
The iShares Blockchain Technology UCITS ETF (BLKC) tracks the NYSE FactSet Global Blockchain Technologies Capped index.
The index is made up of 35 global companies. Companies whose primary business is in blockchain or crypto take 75% of the index at each rebalance. While companies that make products supporting blockchain – like the microchips used for bitcoin mining – make up the other 25%.
BlackRock has been steadily widening its presence in the digital assets industry this year. It launched a crypto trust in August and partnered with Coinbase to launch a custody and trading service.
The fund charges 0.50%.
Bernie’s commentary – will BlackRock acquire crypto companies?
Larry Fink famously called bitcoin an “index of money laundering” when it started rallying in 2017, and suggested BlackRock would have nothing to do with it. So that BlackRock is now making a steady entrance into crypto looks somewhat interesting.
In Fink’s defence, he had a point. Academic researchers estimated that criminal use accounted for roughly half of bitcoin transactions around that time. Crypto was expressly designed as being outside state authorities and therefore outside of law enforcement. No one serious believed then (or believes now) that crypto will ever play a meaningful role in the global payments system. After all, it is the very fact that fiat currencies place a claim on nation states that makes them a trusted unit of exchange (if only because taxation provides assured demand). Instead the future of crypto seems more likely to be in smart contracts.
Still, a lot should be made of BlackRock’s entrance into crypto.
For one, it puts a value on the efforts of small and medium sized ETF providers who worked to get this industry going. They defied sceptics and just kept building. Now the BlackRocks of the world are playing catchup and may even have to acquire a smaller provider to get back in the game.
For two, it lends legitimacy for sure. When your nascent asset class is getting panned on TV every day by Jack Bogle, Bill Gates, Warren Buffet, Jamie Dimon, it makes for a harder sell. But when they all copy you life gets a lot easier.
In terms of this specific launch, I don’t think BLKC is an innovative product per se. BlackRock's European competitors have similar products. Still, that BlackRock is launching it at all sends an important signal.