BlackRock’s ETF chief says 75% of his bitcoin buyers are new crypto fans on Wall Street

SALT LAKE CITY – A year ago, Samara Cohen believed there was a huge need bitcoin that he and his team at BlackRock launched one of the first bitcoin exchange products in the US Now investors are flocking, and many of them new crypto enthusiasts to Wall Street.

Cohen, who oversees the asset manager’s exchange-traded funds and index investments as chief investment officer, told CNBC that BlackRock now recognizes the need for a better way to access bitcoin. “It was for an ETF wrapper,” he told CNBC on stage at the Utah Conference on Permits.

The total market capitalization of all eleven ETF areas now tops $63 billion, with total flows of nearly $20 billion. In the past five trading days alone, spot bitcoin ETFs have seen inflows totaling more than $2.1 billion, with BlackRock accounting for half of those sales.

The increase in trading volume comes as bitcoin reached its highest level since July this week, trading above $68,300. Bitcoin ended the third quarter up nearly 140% from the same quarter last year, outperforming the S&P 500, as the local token and crypto market cap moved higher in lockstep. Crypto aligned stock Coinbase is off about 24% this week, its best week since February.

Cohen told CNBC that part of the strategy to attract customers to his funds was to educate crypto investors about the benefits of exchange-traded products (ETPs).

The 13F filing, which provides quarterly readings on equity positions taken by large investors, shows that 80% of buyers of these new bitcoin products in the US are direct investors. Of the 80% of direct investors, Cohen told CNBC that 75% had never owned iShare, one of the world’s best-known and largest ETF providers.

“So we went into this journey anticipating that we needed to educate ETF investors about crypto and bitcoin specifically,” Cohen said. “As it turns out, we’ve done a lot of education for crypto investors on the benefits of the ETP wrapper.”

Prior to the US Securities and Exchange Commission’s green light on bitcoin currencies in January, investors had several options for buying and holding cryptocurrencies. A centralized exchange like Coinbase was among the most accessible options for US investors. But the first blockbuster bitcoin ETP made it clear to Cohen and others across Wall Street, that crypto exchanges weren’t giving digital asset investors everything they needed.

It helps that the US is a major market for digital goods. New data from Chainalysis shows that North America is still the largest crypto market in the world, accounting for about 23% of all crypto trading volume. The blockchain analytics platform estimates that between July 2023 and July 2024, there will be $1.3 trillion in on-chain value generated.

Venture firm a16z found in its recently released State of Crypto report that more than 40 million Americans own crypto.

So far, adoption has mostly been wealth management clients asking advisors to add new spot crypto products to their portfolios.

In August, Morgan Stanley became the first major bank to allow its 15,000 financial advisors to invest in bitcoin ETFs from BlackRock and Fidelity to clients worth more than $1.5 million. Some companies are still doing internal due diligence before allowing their army of FAs to start actively investing.

“Wealth managers have never shared,” VanEck CEO Jan van Eck told CNBC in Utah. “I mean they’re almost warm.”

Van Eck drew parallels with the European market, where the company has 12 token-based products trading in Europe.

“That’s exactly what we see in Europe,” he said. “Very few private banks have approved investments in bitcoin either ethereum anything else in a big way.” Van Eck said his firm has $2 billion in European crypto ETPs, and that most of the volume comes from individual investors.

Wall Street needs regulations from lawmakers on Capitol Hill before it can become more liberal with crypto.

Cohen thinks that in many ways, ETFs and blockchain technology solve the same problems.

“ETFs have been a force to spread the power of the TradFi markets that have brought a lot of access and transparency, and importantly, they were really fast growing during the crisis of 2008, 2009,” said Cohen, referring to traditional financial markets.

“I find it very rewarding to look at the fact that the bitcoin white paper was published on October 31, 2008, and then you have G20 leaders from around the world to discuss the effects of the financial crisis and how you create transparency through public reporting,” Cohen continued.

BlackRock took less risk through corporate issuance and foreign trade. In the TradFi markets, that movement creates huge tailwinds for ETFs.

“Then at the same time, DeFi becomes a reality within 15 years,” he said.

“Was this a win for Bitcoin? Was this a win for ETP? For me, the answer is: It’s a win for investors, to the extent that we can successfully marry these ecosystems that solve common goals.”