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Multinational Investment Institution, BlackRock files to purchase Bitcoin Futures

Multinational Investment Institution, BlackRock files to purchase Bitcoin Futures

BlackRock intends to fund Bitcoin futures as per two new filings with the U.S. SEC (Securities and Exchange Commission). Prospect documents registered with the Commission on Wednesday, January 20, note that BlackRock would be funding cash-settled Bitcoin futures on exchanges listed with the CFTC (Commodity Futures Trading Commission). Nevertheless, BlackRock did not specify which commodity exchange it would prefer to lead Bitcoin futures purchases. 

Presently, derivatives giant CME Group is the only exchange with the CFTC that provides cash-settled Bitcoin futures. The documents reveal two specific funds. It constitutes the BlackRock Strategic Income Opportunities Portfolio and the BlackRock Global Allocation fund that may presently engage in Bitcoin futures trading. The records show that the designated BlackRock’s funds may start employing derivative products, declaring that these combine currencies (including Bitcoin). 

SEC Filing highlights risks associated with Bitcoin Futures Trading

Nevertheless, the filings described risks connected with Bitcoin futures trading, like illiquidity risks due to the “relatively new” market. Regulatory changes, valuation, and volatility risks could influence the price and hence unfavorably affect the funds’ performance. Additionally, BlackRock is the world’s biggest asset manager, with above $7.8 trillion AUM (assets under management). BlackRock initially displayed an interest in cryptocurrency when it compiled a blockchain working group in 2015. Later, in 2018, the firm estimated the possibility of a Bitcoin exchange-traded fund (ETF). 

The new development occurs almost a month after BlackRock CEO Larry Fink presented a slightly bullish take on the world’s first cryptocurrency. In comparatively rare support, Fink announced Bitcoin has grabbed the attention and could mostly replace gold; however, reminded of its expanding popularity that prominently impacted the U.S. dollar.

Moreover, after a recent interview, BlackRock Inc. Chief Investment Officer Rick Rieder mentioned bitcoin being more useful than gold. If the plans described in this month’s SEC filings continue, it will be the firm’s first Bitcoin-related investment. Nevertheless, it is not yet apparent that BlackRock’s proposed plans will be accepted or not. BlackRock was also on the lookout for crypto talent in late 2020. It posted a job opening for a blockchain VP.

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