BlackRock Gains UK FCA Registration as Crypto Asset Firm: Implications for Investors & the Future of Digital Assets

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Key Takeaways:

BlackRock secures UK FCA registration, paving the way for expanded crypto offerings.
BlackRock offers regulated Bitcoin exposure through iShares Bitcoin ETP in Europe.
Comments from Ripple’s CEO fuel speculation about a potential XRP ETF.

Table of Contents

$12 Trillion Asset Giant Expands Further into Crypto: BlackRock Approved by UK FCA

The UK Financial Conduct Authority (FCA) has officially granted BlackRock — the world’s top asset manager with roughly $12 trillion in assets under management (AUM) — approval as a registered crypto asset firm. This approval marks a major step in strengthening support for the digital asset space and lays the groundwork for BlackRock to provide a higher variety of crypto services to the UK investor community. These services could include crypto custody solutions or new investment products tied to digital assets.

BlackRock Approved by FCA: Service to Join Exclusive Group

According to the FCA’s official website, BlackRock is now the 51st company authorized to manage crypto assets in the UK. This places them alongside other heavyweights such as Coinbase, PayPal, and Revolut, all of which have successfully passed through the FCA’s stringent compliance process. It should be noted that the FCA has been infamously choosy; one report said it approved just 14 percent of the applications. This alone shows how significant the approval is. The tight regulatory landscape highlights the FCA’s commitment to protecting consumers and ensuring the integrity of the UK financial system as increases in crypto adoption continue.

What’s Next for BlackRock in the UK? Exploring the Market for Bitcoin and Crypto ETPs

BlackRock can now run its freshly launched European Bitcoin exchange-traded product (ETP) as a UK entity thanks to this regulatory thumbs up. iShares launched its Bitcoin ETP (IB1T) on the Euronext exchanges in Paris and Amsterdam, offering a lower-cost and regulated avenue for investors looking to gain exposure to Bitcoin without facing complexities that come with direct ownership and other similar investment vehicles.

In order to entice adoption, BlackRock originally launched the ETP at a lower fee of 0.15% until the end of 2024, after which it will return to 0.25%, in line with similar products like CoinShares Bitcoin ETP. Similar to BlackRock’s first issuable US Bitcoin share, iShares Bitcoin Trust (IBIT), each IB1T share is attached to real Bitcoin held by custodian Coinbase. Securing Coinbase as the custodian provides an additional layer of security and trust for investors participating in the Bitcoin ETP.

BlackRock’s US Bitcoin ETF Success Story

The bottom line was that BlackRock was willing to put its considerable weight behind Bitcoin ETFs in the USA. In January 2024, IBIT (inclusive of the iShares Bitcoin Trust) was launched as the largest US spot Bitcoin ETF, managing nearly $49 billion in assets. This trend has been evident since data showed over $95 billion in investments in just one year for US spot Bitcoin ETFs. The sudden surge in popularity highlights how much demand there was for regulated Bitcoin investment products in a previously hostile regulatory environment as well as the rise of digital currencies within investor portfolios. Its meteoric rise in AUM highlights the appetite for Bitcoin as an asset class, particularly when packaged in a product that is both familiar and regulated.

Is There An XRP ETF In The Works?

As BlackRock’s Bitcoin ETP takes shape, XRP ETF rumors stir. Ripple CEO Brad Garlinghouse was asked about the possibility of Ripple partnering with the investment management corporation BlackRock to file an XRP ETF in the US in response to an interview question. Garlinghouse did not elaborate on specific plans, but he hinted that such a potential move “could make sense” for the XRP community.

A Sign of the Times: Institutional Interest in Crypto Surges

BlackRock’s move comes as global demand for Bitcoin investment products grows, particularly outside of North America. This echoes the sentiment of BlackRock CEO Larry Fink, who argued that Bitcoin has potential as a store of value during our record US government debt crisis. As traditional financial institutions continue to enter the crypto ecosystem, BlackRock’s foray into Europe places them well within reach of taking advantage of the uptick in institutional interest in regulated and transparent crypto investment offerings.

FCA’s position on crypto-asset regulation

The FCA has stood by its stringent policies and said on its website that many applications do not have sufficient information or compliance meeting standards and are subsequently refused. BlackRock’s FCA approval is particularly noteworthy due to its significance.

BlackRock’s Crypto Approval: Implications for Future Mainstream Adoption

The successful registration of BlackRock with the FCA is not just a win for the company, but also a likely driver of even more mainstream adoption of cryptocurrencies. The decision highlights the growing mainstream acceptance of digital assets. With BlackRock’s dominant position in the traditional finance space, if successful, the move could be game-changing for the future of digital asset investing.