BlackRock executive: Bitcoin ETF promotes the integration of TradFi and cryptocurrency

A top executive at the world’s largest asset manager said a U.S. spot Bitcoin ETF is driving a broader convergence of traditional finance and cryptocurrencies.

Speaking at the Blockworks Digital Asset Summit in London on Tuesday, Tony Ashraf, managing director at BlackRock, noted the impact of large financial institutions packaging Bitcoin into ETFs.

On the other hand, crypto industry companies and innovations are beginning to evolve traditional finance through asset tokenization, a process that involves bringing physical and financial assets onto the chain.

“The duality between traditional finance and crypto is starting to play out in a very different way because of the catalyst of the [bitcoin] ETF,” Ashraf said. “I think … we’re going to see a lot more convergence happening in the future.”

BlackRock, which manages about $10 trillion in assets as of Dec. 31, launched one of 10 U.S. bitcoin ETFs that went public on Jan. 11.

So far, the fund, iShares Bitcoin Trust (IBIT), has been ahead of its competitors in terms of net inflows.

BitMEX research data shows that IBIT had net inflows of nearly $13 billion as of Monday’s close. This is almost double the $6.9 billion of the second-largest asset collector, Fidelity Investments’ Wise Origin Bitcoin Fund (FBTC).

Grayscale Investments’ Bitcoin Trust ETF (GBTC) remains the largest fund in the space, with nearly $12.5 billion in net outflows year to date.

Increase the chances of attracting new customer groups

Ashraf believes that given the approval of the U.S. Bitcoin ETF, one cannot underestimate the impact of who can now allocate cryptocurrencies.

“We have a whole new group of investors coming into the space who may buy, hold and use ETF structures differently,” he said.

Last week, 10 U.S. spot bitcoin ETFs brought in about $2.5 billion in net inflows, a record for the sector. BitMEX research data showed that on Monday the category saw its first net outflow since March 1, amounting to $154 million.

Still, Bitwise Chief Investment Officer Matthew Hougan said during a panel discussion with Ashraf on Tuesday that he expects assets under management in U.S. bitcoin ETFs could grow to hundreds of billions of dollars in the next few years from about $50 billion currently.

Initial interest in these funds came through self-directed retail investors and registered investment advisors (RIAs).

Hougan noted that bitcoin ETFs are not yet widely available on national account platforms such as Morgan Stanley, Merrill Lynch, Wells Fargo and UBS, which are still in the process of approving the funds for their advisors.

But Bitwise’s chief information officer said he expects one or more major companies to approve access to such funds in as little as a week.

“You should think of the flows we’re seeing in these ETFs as a tap that’s opened 20%,” Hougan said. “There’s still 80% of work to do, and this process is going to continue for a while.”

Leon Marshall, CEO of Galaxy Digital’s European business, said during the panel discussion that liquidity will also increase in the future.

Such liquidity could spark more interest from companies, sovereign wealth funds and central banks, he added.

“They only become interested in an asset class once it reaches a certain level of assets under management,” Marshall said. “So bitcoin really benefits from that effect, the bigger it gets, the more attractive it becomes as an asset class to new client groups.”