Winning the Bitcoin ETF battle is just the beginning, BlackRock's next step: tokenizing traditional assets

Over the past year and a half, the significant rise in Bitcoin prices has driven the performance recovery of cryptocurrency companies like Coinbase, benefiting one of the most influential companies in the traditional financial world, BlackRock.

In January of this year, BlackRock launched the highly anticipated Bitcoin ETF, allowing investors to trade Bitcoin through regular brokerage accounts like stocks. The fund broke new ETF issuance records, currently managing assets of around $16.5 billion, becoming the most significant case in the past three years where BlackRock has combined its asset management capabilities with the crypto market.

According to estimates by the media, BlackRock's current digital asset business generates approximately $88 million in revenue annually, mainly from fees charged by ETFs, a fund management agreement with stablecoin issuer Circle, and a small blockchain trading fund launched earlier this year. Although this figure is relatively small compared to BlackRock's total consulting fee income of $13.7 billion last year, this revenue is expected to increase as the fund grows and the company introduces more crypto products.

According to BlackRock's grand plan, its next step will focus on tokenizing more traditional financial assets onto the blockchain, which is also its most challenging step. In theory, putting digital versions of all assets from stocks to real estate on the blockchain can create new markets and provide fast, round-the-clock trading and settlement. However, like many other financial companies, BlackRock has not yet found a way to apply this technology on a large scale.

In October last year, JPMorgan Chase stated that BlackRock and Barclays Bank had conducted a transaction using its Onyx blockchain, involving tokenized shares of BlackRock's money market fund. While the plan is still ongoing, BlackRock later decided to focus more on using public blockchains like Ethereum, as they are more likely to attract users and activity.

BlackRock's Head of Digital Assets, Mitchnick, said: "When we look back, we will find that many initial attempts in the entire industry have struggled to achieve substantial success at scale."

In March of this year, BlackRock partnered with crypto startup Securitize to create a money market fund that can be traded on the Ethereum blockchain. BlackRock also led a $47 million investment in Securitize, with Joseph Chalom, Head of Strategic Ecosystem Partnerships, joining the board of this startup. According to Etherscan data, as of May 1st, the tokenized fund has attracted $385 million from 13 investors, much slower compared to the hot start of BlackRock's ETF