Cryptocurrencies are not a substitute to fiat currencies, but could become a great asset class, said the CEO of the largest asset manager – BlackRock.
Despite lacking sufficient institutional demand from its clients, BlackRock’s CEO, Larry Fink, outlined the potential of the cryptocurrency industry, which could become a “great asset class.” He further asserted that crypto investors should not treat digital assets as a substitute for traditional currencies.
BlackRock’s CEO Fascinated by Crypto
Ever since the start of the current bull market in late 2020, the world’s largest asset manager, BlackRock, has been frequently connected to various cryptocurrency initiatives. Recent reports highlighted the entity’s first investment dip into the bitcoin world by purchasing a portion of CME March 2021 BTC futures contracts and realizing $360,000 in gains.
The organization’s CEO, Larry Fink, has previously hinted at BTC’s potential to reach a store of value status but ultimately noted that it’s still early to decide.
During an interview with CNBC’s Squawk Box from today, though, the executive seemed significantly more bullish on the crypto space, especially after the successful Coinbase direct listing yesterday.
“I’m still fascinated about it. I’m encouraged by how many people are focusing on it. I’m encouraged by the narrative. It may become a great asset class.”
Nevertheless, Fink distinguished the difference between cryptocurrencies and fiat currencies and noted that digital assets would not substitute the latter. He believes governments and central banks will eventually develop and release their “cryptocurrencies of dollars and other currencies,” known as CBDCs. As such, investors should not think about digital assets as a “substitute of currency.”
Institutional Demand at BlackRock Still Not Fully There
Fink explained that he and his organization are “still watching” the developments in the cryptocurrency space but outlined the lack of substantial institutional demand from BlackRock clients.
“I will tell you about our investors worldwide – we don’t have that much inquiry on it. We are investing in it. We are studying it; we made money out of it. But I’m not here to tell you that we are seeing broad-based interest by institutions worldwide.”
His comments seem somewhat contradictory to the general sentiment in the cryptocurrency community. In the past several months, bitcoin saw the entrance of MicroStrategy, MassMutual, Tesla, Ruffer Investment, One Asset River Management, and more.
Separately, the leading digital asset manager, Grayscale, experienced a massive boost, with its AUM growing past $50 billion. Just for comparison, the company had about $2 billion in AUM in early 2020.