BlackRock’s crypto push deepens with a retooled product to serve stablecoin issuers
BlackRock, one of the giants in the stock and bond world, is stepping up its efforts to serve the stablecoin market, the company first told CNBC. This latest move by Larry Fink’s firm, to be announced on Thursday, aims to further capitalize on the boom in cryptocurrencies. The manager of $13.5 trillion in assets has revamped one of its money market funds with an investment strategy designed to appeal to stablecoin issuers. One of its defining features: It complies with a landmark piece of U.S. legislation signed by President Donald Trump this summer that provides a regulatory framework for stablecoins. Stablecoins are an important part of the cryptocurrency ecosystem and there is a lot of potential growth ahead. Citi analysts predicted in late September that, in an optimistic scenario, total stablecoin issuance could rise from about $280 billion this fall to $4 trillion by 2030. “We want to be a leading reserve manager for stablecoin issuers, and we believe we are,” Jon Steel, global head of product and platform for BlackRock’s cash management business, told CNBC ahead of Thursday’s announcement. After all, BlackRock has been partnering with Circle, the second-largest stablecoin issuer for years, to manage the majority of its reserve fund. Circle went public in June in a hot deal. With the updated fund, the world’s largest asset manager aims to bring similar capabilities to the broader stablecoin issuer community as it did for Circle. Stablecoins, like popular cryptocurrencies like bitcoin, trade on digital ledgers known as blockchains. But the difference is that stablecoins are designed to maintain a consistent value relative to another asset, usually pegged to the US dollar, rather than increasing in price over time. In this way, stablecoins are widely used to conduct transactions on the blockchain, including cryptocurrency purchases. People who want to buy stablecoins go to an issuer and pay with real money. The stablecoin issuer doesn’t just want to hold the money. He wants to earn some return by putting his customer’s money in a safe and accessible place; If a customer wants to redeem their stablecoins for dollars, the issuer must have ready access to the funds to pay them back. This makes money market funds popular destinations for these stablecoin reserves; They are considered both safe and liquid because they invest in things like short-term U.S. Treasuries. They also provide the added benefit of earning higher returns than a traditional savings account at a bank. This is where BlackRock, an experienced money market fund operator, comes into play. The revamped money market fund, now called the BlackRock Select Treasury-Based Liquidity Fund (BSTBL), is designed to have greater liquidity than its previous version. The fund will also provide additional access by extending the trading period from 2:30 PM to 5:00 PM ET. These changes come alongside compliance with the so-called GENIUS Act, which introduced the first federal guardrails for stablecoins and clarified safe places where reserves should be deposited. With Trump’s signature in July, the government allowed US companies to issue these digital tokens; This was a huge win for the crypto industry. BlackRock, one of the giants of traditional finance, is betting that its BSTBL fund will be a asset in its efforts to dive deeper into crypto. Steel told CNBC that the fund allows the firm to continue taking market share in a growing segment of the digital asset space. “This represents an opportunity to not only help our customers if they want to issue a stablecoin and how we can help them do that, but it will obviously create the potential for new distribution opportunities,” Steel added. BLK XLF YTD Mount BlackRock’s stock performance to date compared to the financial sector of the S&P 500. Of course, the revamped money market fund isn’t just aimed at stablecoin issuers. Institutional investors such as pensions and endowments can also put cash into it. For example, Steel said expanded trading hours could attract customers on the West Coast. This “gives corporate treasurers, especially those on the West Coast, a little more time to handle their own business.” [profit and loss] In the digital asset world, BlackRock’s current offerings include a popular bitcoin exchange-traded fund and Ethereum exchange-traded product, both launched last year. The investment manager is also behind the largest tokenized money market fund called BlackRock USD Institutional Digital Liquidity Fund (BUIDL). Launched in March 2024, BUIDL differentiates itself from a traditional money market fund by recording ownership on a blockchain. and is traded 24/7. BlackRock’s earnings report on Tuesday showed that its efforts in the crypto space are paying off. The aforementioned bitcoin and Ethereum products were among the biggest drivers of the 10% organic base pay growth in the third quarter, CFO Martin Small said on the conference call. Meanwhile, its cash management business surpassed $1 trillion in assets under management for the first time last quarter. In fact, BlackRock’s partnership with Circle is primary, with the manager of cash reserves “driving meaningful growth,” Small said. “Our mandate exceeded $64 billion this quarter. BlackRock delivered some of the strongest organic base pay increases in recent history, and we enter the fourth quarter in an excellent position,” the executive continued. BlackRock shares made a modest gain in Wednesday’s session, after gaining 3.4% on Tuesday to close at a record high. The stock rose 0.7% to close above $1,200 per share for the first time. It’s all part of BlackRock’s efforts to branch out from the traditional world of publicly traded stocks and bonds. The ETF operator has announced a number of deals in alternative assets since the beginning of 2024, including the acquisition of private credit manager HPS Investment Partners, infrastructure investment firm Global Infrastructure Partners and alternative data provider Preqin. On Wednesday, a consortium of investors including BlackRock acquired a data center operator for $40 billion. The BlackRock stake, which Investment Club launched a year ago this month, is largely based on its own investment. Growth strategy in these areas. Going forward, BlackRock plans to expand further into digital assets. On Tuesday’s earnings call, CEO Fink called tokenization “one of the most exciting growth areas in financial markets.” Tokenization refers to the creation of blockchain-based versions of various assets. Although he was once a “proud skeptic” of Bitcoin, Fink has spoken positively about blockchain technology dating back at least seven years. “We see future commercial opportunities in the use of tokenization to further bridge the gap between traditional capital markets and the growing digital asset space,” Fink, who co-founded BlackRock in 1988, said on Tuesday’s earnings call. “We see this market growing significantly over the next few years.” (Jim Cramer’s Charitable Trust is long BLK. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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