Despite the turmoil, asset managers bet on cryptocurrencies

Popular money managers are turning to digital assets, finding new ways to monetize investor interest even as trading volumes and prices for Bitcoin and other cryptocurrencies drop.
FTSE 100-listed Aberdeen this week became the latest investment firm to take a crucial step, by buying a stake in the UK-regulated digital asset exchange Archax. The stake would allow the company, which manages 508 billion pounds of assets, to take a seat on the board and represent a bet that Archax technology will enhance how funds, stocks and other securities are traded in the future.
Aberdeen’s investment, which was not previously reported, comes as BlackRock, the world’s largest asset manager, not only announced plans for an institutional Bitcoin spot trading fund, but also agreed to connect its Aladdin platform to a cryptocurrency exchange. Queen Piece. The latest step will make it easier for 82,000 investment experts who are using Aladdin to allow clients access to Bitcoin.
Meanwhile, US brokerage and investment group Charles Schwab last week launched an exchange-traded fund aimed at giving investors exposure to crypto without actually buying the coins. UK asset manager Schroders bought a stake in digital asset manager Fortius in July.
While Fidelity has been providing digital asset custody services for nearly five years, and in April added a bitcoin option to its retirement bids, this summer’s activities point to broader acceptance of digital assets, market analysts said.
“Big asset managers are starting to see this investment as a real investment,” said Chris Brendler, senior research analyst at DA Davidson. “I think it’s a major data point in terms of traditional asset managers embracing what has really been a mockery for years.”
Larry Fink, founder of BlackRock, used to be among the skeptics, quipped in 2017 that “Bitcoin just shows you the demand for money laundering in the world.”
The new digital offerings come after digital assets suffered a severe market sell-off that reduced the total market capitalization of cryptocurrencies from around $3.2 trillion in November to less than $1 trillion.
But Charlie Cooper, a managing director at blockchain technology firm R3 and a former senior employee of the US Commodity Futures Trading Commission, argues that the fact going forward represents confidence. “Deals like this don’t come up randomly at the last minute. These things have been in the works for months if not years, they didn’t decide to do it in a hurry.”
This is what concerns consumer groups. “Just because the top-tier companies want to make money in a new field doesn’t make it a good thing,” said Dennis Keeler, president of Better Markets, an investor advocacy group in Washington. “This volatility is usually a stark warning.”
The wide range of digital asset deals reflects the emerging nature of the asset class and regulatory skepticism about retail products investing directly in Bitcoin. BlackRock has avoided this by offering a private fund to institutional investors, and the Schwab exchange-traded fund invests in listed companies, which aim to profit from providing services to cryptocurrency investors or from blockchain’s underlying distributed ledger technology.
“We know it’s a speculative investment, but we’ve identified it as a long-term trend,” said David Botsett, head of equity product management at Charles Schwab’s asset management arm.
Aberdeen’s stake in Archax is a similar bet. Founded by former hedge fund executives Graham Rudford, Andrew Flat and Matthew Pollard in 2018, Archax provides a platform for institutional investors to trade cryptocurrency and digital financial assets such as corporate fractional equity. Over time, Aberdeen hopes to generate “significant revenue” by giving clients access to its money in the form of digital financial assets, as well as hard-to-trade assets such as private debt and private equity on the stock exchange.
“Our view is that the next revolutionary event will be the transition from electronic trading to digital exchanges and trading through digital financial assets,” said Russell Barlow, global head of alternatives in Aberdeen, who was instrumental in closing the deal. “.
Earlier this week, Aberdeen posted a first-half loss of £320m, as an outflow of clients slashed its AMF.

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