Investors using BlackRock's Aladdin, the firm's portfolio and risk management platform, will soon be able to trade bitcoin using the platform thanks to a partnership with the cryptocurrency brokerage Coinbase.
The companies announced the partnership Thursday. Coinbase shares rose 12% to $90 and BlackRock shares were up 1% to $670 on the news. The S&P 500 was down 0.1% to 4,153 as of 3:37 p.m. EDT.
It is not clear whether Coinbase is the first or only cryptocurrency brokerage with which BlackRock has partnered. Coinbase declined to comment about the partnership beyond its blog post about it, citing a quiet period ahead of its Aug. 9 earnings release. BlackRock could not be reached to comment.
Through the Aladdin platform, Coinbase Prime will offer customers trading, custody, prime brokerage, and reporting capabilities to Aladdin's institutional client base that are also clients of Coinbase. Bitcoin will be the only cryptocurrency available at the start.
Despite a sell-off in digital assets this year, BlackRock says its wealthiest investors are still interested in the asset class.
"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, in the Coinbase blog post. "This connectivity with Aladdin will allow clients to manage their bitcoin exposures directly in their existing portfolio management and trading workflows for a whole portfolio view of risk across asset classes."
The partnership could lead to more Aladdin customers choosing to invest in crypto through Coinbase, which would likely welcome the business, as daily crypto trading volume has slumped from its high of $139.8 billion in Nov. 11 to $77.3 billion on Tuesday, according to CoinMarketCap.com. The SEC is also investigating whether Coinbase has allowed investors to trade tokens that should have been registered as securities.
Coinbase shares are down more than 64% so far this year.
In the blog post, Brett Tejpaul, head of institutional at Coinbase, and Greg Tusar, vice president of institutional product, said the partnership with BlackRock is "an exciting milestone for our firm."
"As the trusted partner enabling institutions to participate and transact in the crypto economy, we are committed to pushing the industry forward and creating new access points as institutional crypto adoption continues to rapidly accelerate," the blog post said.
In April, BlackRock was among a group of asset managers that participated in a $400 million round of funding for Circle Internet Financial, a global internet finance firm and the issuer of the digital currency USD Coin, a stablecoin pegged to the U.S. dollar.
