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Crypto exchange Coinbase has partnered with BlackRock, the world’s largest asset manager, to offer institutional users of its Aladdin platform access to crypto through Coinbase Prime.
Connecting the two systems will give BlackRock’s institutional clients—who cumulatively manage $20 trillion—access to Coinbase’s trading, custody, prime brokerage and reporting services. Initially, that will include access to Bitcoin.
It’s a huge development for the crypto exchange at a time of turmoil: the company laid off 18% of its workforce to prepare for what it expects will be an “extended” Crypto Winter. Its shares (COIN) are down 60% this year, but rose 22% on Thursday morning on the BlackRock news.
Coinbase lists more than 200 coins and saw $1.6 billion in trading volume over the past day, according to CoinMarketCap. Coinbase’s institutional clients account for 70% of that volume, according to Brett Tejpaul, head of Coinbase Institutional.
“Coinbase’s strategy is to provide a single point of entry into the marketplace to do everything that one would want to do with crypto: Buy, sell, store, stake, and so on,” he told Decrypt on a call on Thursday morning. “Having a partnership with Aladdin that gives $20 trillion of capital access to crypto is a huge game changer, I think for Coinbase and for the industry.”
That interest from institutions hasn’t waned in the face of rough markets, either, he said.
“These slow moving giants take literally years to think about digital assets, cryptocurrency,” Tejpaul said of the institutional due diligence process. “Going fast for them would be a year to 18 months. So what’s been nice to see is that even with a pretty volatile backdrop for all markets, not just cryptocurrency, institutions have continued to onboard.”
BlackRock said in a press release that the partnership means its clients will be able to track their crypto investments alongside the rest of their portfolio.
“This connectivity with Aladdin will allow clients to manage their Bitcoin exposures directly in their existing portfolio management and trading workflows for a whole portfolio view of risks across asset classes,” Joseph Chalom, BlackRock’s global head of strategic ecosystem partnership, said in the release.
It’s not the first time this year that BlackRock has announced crypto news.
In April, the $10 trillion asset manager listed the iShares Blockchain and Tech ETF, which gives investors exposure to blockchain technology without directly investing in digital assets.
At the time, COIN shares made up 11.45% of the ETF’s portfolio. That has since increased to 13.27%. The iShares ETF, which trades on New York Stock Exchange Arca under the IBLC ticker, has $6.7 million under management.
Meanwhile, Coinbase launched derivatives trading at the end of June, and now offers a “nano” Bitcoin futures trading contract (which can be purchased in denominations equal to 1/100th Bitcoin). The contract is available through third-party retail brokers.
The offering was made possible by Coinbase’s acquisitions of FairX, which is already regulated by the Commodities Futures Trading Commission. It’s the same way that FTX entered the U.S. derivatives market with its acquisition of LedgerX and Crypto.com with its acquisition of North American Derivatives Exchange.
Even so, Coinbase still has a Futures Commission Merchant application pending with the National Futures Association.
“We’re pursuing our FCM and then we hope that, at one point in the future, you’ll be able to access both spot and futures on the same platform,” Tejpaul said. The company still has an application pending with the National Futures Association that, if approved, would grant it its own Futures Commission Merchant license.