BlackRock eyes blockchain beyond Bitcoin through smart contract supply chains

In an interview at the recent VettaFi CryptoCurrency Symposium, Jay Jacobs, U.S. Head of Thematics and Active Equity ETFs at BlackRock, highlighted the journey to launching the iShares Bitcoin Trust ETF (IBIT) and BlackRock’s longer-term view on blockchain.

Development of the iShares Bitcoin Trust, he explained, stemmed from client demand for incorporating diverse asset classes into the familiar and efficient ETF structure. Jacobs emphasized the three primary advantages of the Bitcoin ETF: access, convenience, and quality. By offering Bitcoin exposure within a traditional ETF format, BlackRock’s initiative caters to investors seeking to diversify their portfolios with digital assets while also streamlining the “complexities” associated with direct crypto investments.

Jacobs explained that IBIT’s inception reflects the firm’s technological prowess and risk management expertise and responds to investors’ evolving needs in a changing economic landscape. According to Jacobs, the current environment, characterized by high-interest rates, geopolitical uncertainties, and macroeconomic challenges, drives investors towards more granular portfolio strategies. Bitcoin and digital assets, therefore, offer an alternative avenue for diversifying investment portfolios.

Jacobs also delved into the broader context of Bitcoin’s underlying mechanism in blockchain as a technology. He identified blockchain as a decentralized and often public ledger that tracks ownership and enables peer-to-peer transactions without intermediaries. This technology, Jacobs pointed out, has far-reaching implications beyond cryptocurrencies, such as in supply chain management, where it can enhance security, transparency, and efficiency.

Jacob’s views align with an ever-growing trend suggesting Bitcoin ETFs may be a trojan horse for digital assets to gain ground within mainstream institutions. Colin Butler from Polygon Labs told CryptoSlate recently that web3 infrastructure is capable of handling the trillions of dollars held by corporate institutions, and even Jamie Dimon recognizes the power of blockchain to tokenize assets.

As for the adoption curve of blockchain, Jacobs believes the technology is still in its nascent stages. Although it holds significant promise, its widespread application across industries and governments is yet to be fully realized. He says the real-world implications of blockchain, particularly in areas like supply chain management, are vast. Jacobs argued that blockchain can improve product safety, streamline payment processes, and quickly identify points of failure in manufacturing, leading to more responsive and efficient operations.

BlackRock’s foray into Bitcoin ETFs caters to the growing investor appetite for diverse and granular investment options among its clients. It also signals a broader shift in the financial industry’s approach to digital assets and blockchain technology. BlackRock CEO Larry Fink also recently heralded the potential of blockchain in highlighting the power of tokenization to combat corruption.