Original author: huf, co-founder of Pear Protocol

Original compilation: Frank, Foresight News

People dont really understand what Blackrock is or what they do.

Lets start with a brief introduction to BlackRocks founder and CEO, Larry Fink, because this will become important later.

Larry Fink joined Wall Street in 1976. He was smart and made money. He pioneered the idea of ​​debt securitization (packaging different loans into bonds). He then ran the trading desk for those mortgage-backed securities (MBS), yes, the bonds that led to the 2008 global financial crisis.

Larry Fink then made a mistake and lost more than $90 million due to wrong bets on interest rates, which made him realize that risk management is important and customer trust is important.

So the ambitious Larry Fink decided to start his own company and focus on these two principles, which is to say, Trust me, brother.

To get started, he approached colleagues at the Blackstone Group and obtained a $5 million line of credit. Thus, Blackstone Financial Management was born, and 20 years later, after undergoing a large number of mergers and acquisitions, it became BlackRock, which today has approximately US$9 trillion in assets under management and is also the largest asset management company in the world. .

But building a great business wasnt enough for Larry Fink. In 2016, he was widely considered to be the incoming U.S. Treasury Secretary after Hillary Clinton was elected President of the United States.

He has deep political connections and background and is an outspoken Democrat who is often heard saying, As I tell Washington...

Now, let’s turn our perspective back to BlackRock, a large asset management company that some believe will “own all your Bitcoins.”

But BlackRock doesn’t actually own anything; their clients are the real owners. BlackRock only manages these assets and does not have custody functions. It is not a bank.

do not trust me? Then you can check their annual report.First page: We are a fiduciary to our clients. The money we manage belongs to our clients (We are the fiduciary of our clients, and the funds we manage belong to our clients).

So how does BlackRock work? Quite simply, lets say you want to invest in U.S. stocks. Instead of buying all the stocks yourself and rebalancing frequently or paying taxes on each trade, buy a BlackRock ETF or BlackRock Active Management Fund and let them Do this for you.

You will receive a receipt confirming your ownership (as a percentage of holdings) of the ETF or active fund, which then tracks the value and performance of those underlying assets, and BlackRock has no control over these The assets do too much and can only be held using custodian banks (repos only under ISDA/CSA).

Likewise, BlackRock cant do anything about the spot Bitcoin that goes into the Coinbase custody account, because the Bitcoin doesnt belong to them at all, they just let you get a more cost-effective purchase service.

But whats really interesting is BlackRocks relationship with the U.S. government and the Federal Reserve. Do you know who ended up managing the toxic assets that the Fed took over from Bear Stearns in 2008?

Yes, it’s BlackRock.

Also, in 2020 when Powell and the Fed wanted to start buying some corporate bonds to help prop up the economy, guess who they turned to?

Yes, BlackRock too.

Here’s where it gets interesting, guess who the FDIC chose to clean up Signature Bank and Silicon Valley Bank’s portfolios earlier this year?

That’s right, it’s still BlackRock.

As Bloomberg senior ETF analyst Eric Balchunas pointed out, BlackRocks application for a Bitcoin spot ETF is indeed a big deal, so what is BlackRocks overall view on digital assets?

We can find the answer on page 19 of their annual report.

BlackRock has identified some things they are interested in, particularly the tokenization of real-world assets (RWA) including stocks and bonds.

Remember, this guy, Larry Fink, made a big bet on debt securitization and made a fortune. That said, he fully understands the power of financial innovation (especially encapsulated assets) and the potential it brings for new products, capital efficiency, cost advantages, and more.

But that’s not BlackRock’s only focus in the crypto space. They also put their money where their mouth is and invested $400 million in Circle, the issuer of the stablecoin USDC, along with Fidelity and several other companies.

Circle co-founder and CEO Jeremy Allaire also likes him because Circle uses BlackRock to help them manage some of their reserve assets (albeit at a high fee).

To me, it’s super interesting that BlackRock chose to use Coinbase as the custodian of the spot Bitcoin ETF – which means it chose a company that is being targeted by the U.S. Securities and Exchange Commission (SEC).

It could have chosen Bank of New York Mellon, the oldest and most trusted bank in the United States, as a safe bet. The following news was big news at the time.

But then again, is this really a surprise? After all, BlackRock is already involved in some of Coinbases businesses, such as Coinbases partnership with Aladdin (Foresight News notes that Aladdin is an integrated platform that meets the efficient operational and investment management needs of BlackRock itself and its institutional clients) relation.

You can quote me: Aladdin is to BlackRock what AWS is to Amazon.

So where does this leave us? Well, the SEC can still reject an ETF on two grounds:

• Spot Bitcoin can be manipulated;

• There are currently no spot exchanges of “sufficient size” under a regulatory sharing agreement with Nasdaq;

Clearly, there are some parts here that could change, and BlackRock doesnt want spot Bitcoin to be dominated by the likes of Binance and Changpeng Zhao, or have a holder as powerful as Tether, a holder of U.S. Treasuries and Bitcoin.

The weak part of the entire USDT trading chain is also the exchange that uses it for transactions.

This is why there is a systemic global attack trying to shut down Binance, and why the US is strongly leaning towards a KYC based USDC stablecoin system - BlackRock must be angry that Tether is making more money than it is.

So after careful consideration, the Bitcoin spot ETF is a compromise - BlackRock aims to be the beneficiary of the flow and fees generated on Bitcoin exchanges.

While first applications may be rejected and ETF approvals may be continually delayed, one thing is for sure, BlackRock is already salivating.