Jan 19, 2024

BlackRock Head of Digital Assets Robert Mitchnick joins "First Mover" to discuss the asset manager's journey to an approved spot bitcoin exchange-traded fund (ETF).

Video transcript

This spot, Bitcoin ETF update is presented by Grayscale, the world's largest crypto asset manager. Blackrock's move into the crypto space surprised the industry when they filed for a spot, Bitcoin ETF with the SEC in June last year. Yesterday, after one week of trading, the firm spot Bitcoin ETF became the first in class to reach $1 billion in assets under management with 11 asset managers receiving approval. At the same time, we caught up with Blackrock head of digital assets, Robbie Mitch Nick to talk about how the firm plans to stay competitive. Let's take a look, Robbie, how is it going? How are you feeling one week later? How many parties have you guys had over there? Hey, Jan. Well, thanks for having me on. Not, not too many parties. To be honest, we've been uh very focused on uh the launch which is has gone very well. Um You know, we're excited about that and we've had lots of uh client interest uh as you can expect. And so we've been kind of all hands on deck um being out there talking to clients and educating them on, on the project product and the story and, um, and all the elements of it, I believe Blackrock now has over a billion dollars in their ETF uh fund. Is that what you were expecting? Were you expecting more? Were you expecting less? How, how is the traction matching expectations? Yeah, I don't think anyone knew exactly what to expect. You know, this was uh an unprecedented uh dynamic in, in many ways. And, um, you know, we're, we're very pleased obviously with uh the early results, um you know, product has uh traded, very significant volumes has been been quite liquid. And um you know, we've seen obviously the strong inflows that, that, you know, so, um you know, we're, we're very bleak now for those in the crypto industry, this has been a 10 year long battle and some were shocked and pleasantly surprised when Blackrock decided to throw its hat in the ring um and submit an application for a spot, Bitcoin ETF in the United States. What went into making that decision? How have you been tracking the digital asset industry? Uh And how are you looking at it moving forward? Yeah. Well, it's been really a multiyear journey for us. Um You know, and I think uh it, it, it's been very much uh client focused in terms of how we've engaged in this space and what our strategy has been, we've been focused on uh being able to provide uh solutions and, and access vehicles in this space to those clients who seek it. And so when you look at what we've done over multiple years, you know, partnership with, with Coinbase or partnership with the Circle and the technology capabilities we build. Um You know, this is a natural extension uh of that journey that we've been on. Robbie, everyone's talking about the competition. 11 asset managers got that approval at the same time as Blackrock did. Uh Some are saying that Blackrock, although it is the largest asset manager in the world, like I mentioned at the beginning of this industry, at the beginning of this interview, excuse me, uh that Blackrock isn't a crypto native firm and some of the crypto native asset managers are using that to say, come, come trade with us. How would you respond to that? Yeah, I think we're, we're very focused on the capabilities we bring across uh the spectrum here. So obviously, uh you know, we've been a leader in the ETF space for multiple decades. Um We've been a leader in innovation in, in many areas within, within ETF S and uh this is another of those, but I also think it's important to look at the digital asset capabilities that, that we've built. Uh alongside that I'm thinking in particular about our partnership with, with Coinbase dating back to the 2021. And um the integration that, that we did between Coinbase Prime and Aladdin to make Bitcoin work uh with Aladdin and then be able to run it on, on the same ETF servicing platform that, that supports three trillion in ishares assets. I think that's a really important part of what we, we bring to the table here and being able to provide an ishares quality product uh to investors. One of the big headlines this week has been all about the fees. I know Blackrock reduced their fees. I think the latest asset manager to reduce fees yet again was Franklin Templeton bringing them down to 0.19. Are you expecting your fees to, uh, reduce even further? And I guess on top of that, how, how are you planning to remain competitive with 10 other asset managers, uh, offering the same product? You know, I think, um, you know, fees are just one part of the story, right? Um, you know, is the overall value proposition of the product, but we certainly feel like our fees, uh, today are, are, you know, very compelling and we've gotten, uh, you know, positive feedback from, from clients around that. And that's part of what we try to, to do at ishares is to, to be able to provide, um, low cost, high quality access solutions. And, and we think we've done that here. Are your clients knocking down the door for a spot? Ectf, uh, a a all I could say is, you know, we, we did file, uh for that in November. Um, and you know, who knows how that ends up playing out but certainly the majority of our client interest today is in, in Bitcoin. Have you had any, uh, engagement with the regulator on that spot e ETF application so far or has the focus really been on the Bitcoin one? Yeah, that, that one I can't comment on unfortunately. All right, when it comes to digital assets moving forward, what are you looking at, you know, you, you look closely at this industry outside of Bitcoin and Ether. Uh how is blackrock looking at the industry in general? Yeah. Well, we think of the space across kind of 33 buckets, three key areas of of focus where uh you know, innovation of significance is happening. One bucket is is crypto uh itself. Uh a second is stablecoin. So we've done a lot. It was the primary reserve manager on the, the circle us DC reserve and it's been a lot of interesting technology collaboration with them there as well. And then the third is, is tokenization which we think is, you know, more of a uh longer term trend in terms of how that's gonna play out. But um you know, we're very excited about the efficiency and access uh opportunities that tokenization may present as well. And zoom out a little further for me coming from traditional finance, how do you think traditional finance and crypto will work together to build out the future of finance? What does the future look like to you? Yeah, it's a great it's a great question. I think, you know, we think about the potential of this technology and this idea that you can have uh transparency that you can have global transactions uh in near real time and near near zero cost that things can be digitally native and programmable. I mean that unlocks all kinds of interesting applications in terms of, you know, efficiency cost access. Um And so we're excited about uh about all that and that's why, you know, you've seen the exploration and the initiatives we've undertaken to date. Ok, Robbie, we're gonna have to leave it there. Thanks so much for joining first mover. Thanks so much for having me on Jed. That was Blackrock head of Digital Assets. Robbie Mitnick. Let's take a look at the chart of the day.

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