Larry Fink, CEO of the world’s biggest asset manager BlackRock, has raised concerns about the prospects of the cryptocurrency industry, stating that exchange-traded funds (ETFs) are unlikely until the digital asset sector is “legitimate,” according to a report by CNBC on Thursday.
Speaking at the New York Times Dealbook conference on November 1, Fink said he was unsure about Bitcoin ETFs. “I wouldn’t say never, when it’s legitimate, yes,” he stated. He also questioned the maturity of the nascent cryptocurrency industry and the fervor around ETFs, which has persisted over a year.
“It will ultimately have to be backed by the government. I don’t sense that any government will allow that unless they have a sense of where that money’s going for tax evasion and all of these other issues,” he cautioned.
Another factor about cryptos that worries major investment banks and governments is their latency and secrecy. These concerns about Bitcoin have been raised by large corporations as the main reason to distance themselves from the crypto realm. Fink mentioned that Bitcoin’s use on the dark web for illicit activities has tainted its image.
“I do see one day where we could have electronic trading for a currency that could be a store of wealth. But right now, the world doesn’t need a store of wealth unless you need that store of wealth for things you should not be doing,” he added.
Blockchain is another matter, with major companies and countries flocking to integrate distributed ledger technology (DLT) into their operations. Administrative financial integration using blockchain has been taken up by many countries including China, South Korea, Thailand and Singapore, among others.
Fink, despite being a skeptic on crypto, is very supportive of blockchain. “We are a huge believer in blockchain,” he said. Given that BlackRock holds significant fixed income assets in its portfolio, he mentioned that the “biggest use for blockchain will be in mortgages, mortgage applications, mortgage ownership, anything that’s laboured with paper.”
The U.S. SEC has also had its fair share of concerns regarding Bitcoin ETFs and has not approved any proposals for the same till date. Earlier this year, the regulator stated that “significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors”.
Many financial and technology big names are capitalizing on the rise of crypto and blockchain. Gary Cohn, ex-president of Goldman Sachs and former adviser to U.S. President Donald Trump, recently joined DLT start-up Spring Labs following his exit from the White House. Steve Wozniak, co-founder of Apple, has also frayed into the blockchain space, with his appointment as a co-founder of EQUI Global, a VC focusing on blockchain technology firms.