Bitcoin has attracted immense mainstream attention in recent times. The biggest of the financial players, like Asset Management giant BlackRock, are investing their efforts and resources in the most powerful cryptocurrency.
BlackRock has now allowed two of its funds to invest in Bitcoin futures.
BlackRock To Venture in Bitcoin Market
The prospectus filed with the United States SEC reveals that two of the significant Funds of Blackrock can now invest in Bitcoin futures. The documents indicate that the BlackRock Strategic Income Opportunities and BlackRock Global Allocation Funds Inc have included Bitcoin Futures as a derivative product for use.
The investment giant that manages $8.7 Trillion assets is now diverting its portfolio, allowing two above mentioned funds to invest in Bitcoin futures. With the recent filing, BlackRock is likely venturing into the Bitcoin market. Both the funds can trade only in the cash-settled bitcoin futures along with other listed assets. The firm did not confirm the commodity exchange for which it will be doing the crypto futures buys; however, only CME is currently registered to offer future products.
The recent filings include caution to the investors that Bitcoin futures are a relatively new market and can pose illiquidity risks. Also, such funds are susceptible to regulatory changes, valuation hazards, and volatility. This is the first time BlackRock has talked about Bitcoin in its filing, explicitly mentioning that some funds may engage in “future contracts based on bitcoin.”
The world’s largest asset manager is now allowing its clients to get cryptocurrency exposure for the first time. With the cash-settled bitcoin futures, the contract holders would receive cash credit on the contract expiry. Such futures do not require the underlying asset to be delivered physically.
BlackRock CEO Larry Fink had expressed his views about Bitcoin in December last year. He noted that Bitcoin could grow into a global market. The Chief Investment Officer Rick Raeder also noted in an interview with Bloomberg that Bitcoin is highly in demand and “it’s going to be part of the asset suite for investors for a long time.”
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