Coinbase shares surge on tie-up with BlackRock

Shares in Coinbase surged on Thursday after the crypto exchange announced a tie-up with asset manager BlackRock that would make it easier for institutional investors to buy and sell bitcoin.

In a blog post on Coinbase’s website, the company said it would connect to Aladdin, BlackRock’s investment technology platform. The platform, which supplies essential plumbing to the global investment industry, will allow BlackRock customers direct access to crypto, it said. The first token available will be bitcoin.

Coinbase shares initially rose as much as 30 per cent before settling 17 per cent higher on Nasdaq in New York.

The tie-up with the world’s largest asset manager is a boost for Coinbase, which has endured a tough year as valuations in the crypto market tumble and customers trade less frequently.

In June it abandoned its growth plans and cut a fifth of its workforce — more than a thousand people — as the downturn in cryptocurrency trading volumes and prices rocked the industry’s biggest players.

Before Thursday’s boost, Coinbase shares had lost two-thirds of their value in the past year. Adding to its woes, US prosecutors last month charged a former employee and two of his associates with insider trading.

Coinbase said it would provide clients of BlackRock with “crypto trading, custody, prime brokerage, and reporting capabilities”, adding that the tie-up was “an exciting milestone for our firm”.

BlackRock’s Aladdin system is one of the most widely-used pieces of technology in the financial services industry, linking investors to markets and measuring risk. It is used by asset managers, banks, insurers, pension funds and corporations.

“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.

“This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows.”

BlackRock’s clients will be linked to the Coinbase Prime platform, which the company says provides trade execution in 200 assets, as well as data, analytics and reporting.