BlackRock Enters Cryptocurrency Market: "Institutional Adoption Will Accelerate"

Korbit Research Center Report

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myunghwan Lee] As BlackRock, the world's largest asset management company, has launched a private Bitcoin spot trust, an analysis suggests that the institutional investors' improved conditions could accelerate the integration of cryptocurrencies into the regulatory framework.

On the 27th, the Kobit Research Center, under the domestic cryptocurrency exchange Kobit, analyzed, "With improved conditions for institutional funds to invest in Bitcoin, the integration of cryptocurrencies into the regulatory system will become more active."

On the 4th (local time), Coinbase, a U.S. cryptocurrency exchange, partnered with BlackRock, the world's largest asset manager. With BlackRock managing assets worth 1 quadrillion won joining hands with Coinbase, there have been evaluations that this could change the flow of the cryptocurrency market.

Prior to this, the stabilization of the cryptocurrency market that began at the end of July is also led by institutional investors, according to the Kobit Research Center's analysis. Bitcoin wrapped funds have shown a slight but steady inflow since July, and the Chicago Mercantile Exchange (CME) futures market indicators did not collapse significantly during the bearish market in June and showed an upward trend in July. This suggests continuous market participation by institutional investors. Although Coinbase's trading volume decreased in the second quarter, the proportion of institutional investors' trading volume increased, indicating their growing market participation.

It is analyzed that the launch of BlackRock's private Bitcoin spot trust will intensify competition in the Bitcoin fund market targeting institutions. This could lead to a reduction in fund management costs. Jung Seok-moon, head of the Kobit Research Center, stated, "Competition among funds leads to the release of better products, improving conditions for institutional funds to invest in Bitcoin, and ultimately positively affecting the integration of cryptocurrencies into the regulatory framework."

There is also a prospect that BlackRock's market participation could change the stance of U.S. regulatory authorities on cryptocurrencies and related investment products. Until now, U.S. regulators have taken ambiguous positions on various cryptocurrency issues. If long-term funds such as U.S. pension funds become cryptocurrency holders through BlackRock's participation, efforts to eliminate regulatory uncertainties could accelerate. Director Jung noted, "Eliminating uncertainties and establishing appropriate supervision and guideline frameworks for the cryptocurrency market will be an important catalyst for industry development."