BlackRock Eyeing Cash-Settled Bitcoin Futures

BlackRock could soon add cash-settled bitcoin futures contracts, according to a new regulatory filing.

The world’s largest asset manager, with $7.8 trillion under management, filed prospectus documents on Wednesday for the BlackRock Global Allocation Fund and BlackRock Funds V, saying each could invest in derivatives that draw value from various financial instruments “including bitcoin.”

Any bitcoin futures the funds can invest in must be cash-settled on Commodity Futures Trading Commission-registered commodity exchanges, according to the filings, which is limited to CME Group in the U.S.

BlackRock highlighted illiquidity, valuation and volatility challenges as potential risks in the filing. Bitcoin futures are so new they aren’t as heavily traded as other futures, it says, and the cash market in bitcoin has been the target of manipulation.

The documents follow comments made last month by BlackRock CEO Larry Fink, which suggested bitcoin could “evolve into a global market asset,” in comments to Bank of England Governor Mark Carney at the Council on Foreign Relations. In November Rick Rieder, the chief investment officer of global fixed income and head of the global allocation team, said bitcoin could rival gold “to a large extent” and that crypto is “here to stay.”