A Coinbase–BlackRock alliance may not be good for everyone

BlackRock announced that its customers who also use Coinbase will have access to the crypto exchange’s Prime program, a crypto trading platform for institutional investors. Shares in Coinbase were up 31% in early trading today.

Why should we care?
Coinbase’s tie-up with BlackRock could potentially lead to a sharp spike in institutional interest in crypto: BlackRock holds $8.5 trillion in assets. “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets,” said Joseph Chalom, Global Head of Strategic Ecosystem Partnerships at BlackRock. The connectivity between BlackRock and Coinbase Prime will let clients observe crypto exposures and trade in the same way they would other asset classes, which may normalize how crypto is treated by deep-pocketed investors, trickling down into the retail space in the process. This may also boost the price at which cryptocurrencies are traded, which is a boon for exchanges like Coinbase. But, without access to proprietary trading algorithms institutional investors use, smaller crypto boosters may struggle to keep up with institutional investors’ trades, rendering crypto a two-classed asset, with profitable outcomes determined sharply by knowledge access and technological capacity.