BlackRock Secures FCA Approval for UK Crypto Operations, Launches Bitcoin ETP

BlackRock, the world's largest asset manager, has successfully secured registration with the UK's Financial Conduct Authority (FCA) to operate as a registered crypto asset firm. This approval marks a significant milestone for BlackRock, as it becomes the 51st company to be added to the FCA's cryptoasset register. The FCA's rigorous approval process, which has seen only 14% of applications approved, underscores BlackRock's commitment to compliance and regulatory standards.

As an arranger, BlackRock will be able to "arrange the execution of transactions in cryptoassets to support ETP subscriptions and redemptions" between issuers and authorized participants but it will not be able to onboard any new customers. Additionally, it will not be able to operate a machine that "utilizes automated processes to exchange cryptoassets for money" vice versa - without written consent from the regulator.

BlackRock joins the likes of crypto exchange Coinbase who recently managed to get on the register this year, though a new crypto regime awaits. The registration is closely tied to the launch of BlackRock's iShares Bitcoin ETP, listed under the ticker IB1T, which began trading on Euronext Paris and Amsterdam. This product is backed by physical Bitcoin and custodied by Coinbase, providing investors with direct, regulated exposure to Bitcoin. The ETP has introduced a temporary expense ratio of 0.15%, which will increase to 0.25% after the end of 2024, aligning it with competitors in the European market.

BlackRock's entry into the UK crypto market is part of a broader strategy to tap into the growing institutional and retail interest in regulated Bitcoin exposure outside the US. The FCA's approval reflects a broader institutional shift toward regulated crypto offerings in Europe, where market participants are increasingly demanding transparency and safeguards. This move positions BlackRock to benefit from emerging regulatory clarity and rising investor demand in Europe, as the continent continues to implement the Markets in Crypto-Assets (MiCA) framework.

The launch of IB1T in the UK expands BlackRock's crypto offering to a broader geographic base, allowing the asset manager to play a larger role in shaping the future of regulated Bitcoin exposure on the continent. This development is significant as European regulators continue to implement the MiCA framework, which aims to harmonize crypto regulation across the EU. Although the UK is no longer part of the bloc, FCA registration remains essential for companies targeting British investors.

BlackRock's CEO, Larry Fink, has highlighted macroeconomic risks tied to rising US debt levels, noting that these fiscal pressures could challenge the dollar’s status as the dominant global reserve currency. This perspective strengthens the argument for Bitcoin as a long-term store of value, further bolstering the demand for regulated crypto investment products. The firm's established credibility and infrastructure are expected to accelerate adoption, especially among institutions and cautious retail participants.

The FCA's decision to approve BlackRock's product also highlights a broader institutional shift toward regulated crypto offerings in Europe. The approval rate of 14% for crypto firms seeking registration underscores the FCA's stringent compliance requirements, which BlackRock has successfully met. This milestone positions the world’s largest asset manager to broaden its crypto footprint in Europe, following the successful rollout of similar products in the US.