Coinbase Backs BlackRock’s Game-Changing Crypto Strategy Amid Market Surge

Bitcoin has surged unexpectedly, reversing $100 billion in losses following a crypto downturn amid concerns that the Biden administration might be attempting to “Kill” crypto.

The bitcoin price has soared by 5%, propelling Ethereum, XRP, and the broader crypto market higher, following the Federal Reserve‘s decision to maintain interest rates and Fed chair Jerome Powell‘s indication that he may soon initiate cuts—predicting three cuts this year.

Ahead of the Fed’s highly-anticipated announcement that triggered a surge in the bitcoin price, BlackRock, the world’s largest asset manager, quietly disclosed that it has already initiated the second phase of its plan for a crypto-based “revolution in financial markets“—a development Citi analysts anticipate could evolve into a “$5 trillion market by 2030.“

BlackRock, which jumpstarted the push to introduce a spot bitcoin exchange-traded fund (ETF) to Wall Street last year, has filed to introduce a tokenized private equity fund (BUIDL) in collaboration with asset tokenization company Securitize.

Bitcoin and crypto exchange Coinbase has revealed it will provide infrastructure support for BlackRock’s new fund.

“We are excited to announce that Coinbase has been chosen as a key infrastructure provider for Blackrock and Securitize tokenized investment fund,” Coinbase’s institutional business posted to X. “This partnership reflects our commitment to connecting institutions to crypto and demonstrates our ability to provide the necessary technology and products to support the rapidly growing tokenization sector,” they added.

Coinbase and BlackRock began their collaboration in 2022, with the asset manager utilizing the exchange to grant its institutional clients access to bitcoin, a move hailed at the time as “a huge milestone for the crypto space,” opening the doors for institutions to access bitcoin.

BlackRock’s IBIT spot bitcoin ETF, which Coinbase holds custody over, has amassed $15.5 billion in assets under management in just three months, making it one of the fastest-growing ETFs in history.

The documentation for the new fund, filed with the U.S. Securities and Exchange Commission (SEC) last week, did not specify the cryptocurrencies or assets it would hold. Ondo Finance, a real-world assets tokenization platform, witnessed a 40% surge in the price of its ondo coin following news of the filing.

In January, BlackRock’s iconic founder and CEO Larry Fink outlined his two-step plan for crypto in an interview with CNBC. “We believe this is just the beginning. ETFs are step one in the technological revolution in the financial markets,” Fink said. “Step two is going to be the tokenization of every financial asset.”

Bitcoin and crypto’s blockchain technology allows traditional assets to be “tokenized” on a public ledger, potentially facilitating the transfer of anything from stocks, bonds, real estate, to alternative investments like art, at a lower cost and with greater ease.

“We have the technology to tokenize today,” Fink said. “If you had a tokenized security … the moment you buy or sell an instrument, it’s known it’s on a general ledger that is all created together. This eliminates all corruption, having a tokenized system.”

Last year, BlackRock, JPMorgan, and other Wall Street behemoths quietly laid the groundwork for the crypto revolution that Fink envisioned—something that could usher in “the next generation for markets.”

“The real game-changer for tokenized assets is their ability to make financial institutions more nimble, developing new products for new markets at a rate that would be impossible with existing technology,” Sergey Gorbunov, founder of Axelar protocol and the chief executive of Interop Labs, said in emailed comments to Forbes. “The infrastructure is now in place to deliver these advantages across multiple blockchains with transparency and monitoring, as well as modular customization required for compliance on a global scale.”

Meanwhile, bitcoin and crypto adoption could be catalyzed by the advancement of real-world assets tokenization.

“Asset tokenization is just one of many potential long-term drivers of web3 [crypto] adoption where infrastructure has matured to the point that it is possible to deliver significant advantages over legacy systems,” noted Gorbunov. “You often hear that blockchain use cases have not emerged but in our view, the use cases are far ahead of the infrastructure. That is now beginning to change.”