BlackRock Chairman and CEO Larry Fink noted that one of the “less discussed” aspects of the Ukraine-Russia war is “its potential impact on accelerating digital currencies.”
“The war will prompt countries to re-evaluate their currency dependencies,” Fink wrote in his March 24 letter to shareholders, something aa Credit Suisse analyst also recently pointed out. “Even before the war, several governments were looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate.”
His comments hit the market as Bitcoin and other cryptocurrencies are seeing a rise.
Bitcoin (BTC), the largest cryptocurrency by market capitalization, is up 15% over the past month, close to $44,100 as of Thursday afternoon XBT index. Ether (ETH) has gained 20% during the same time, changing hands above $3,100.
Meanwhile, smart contract token Cardano (ADA) as well as lesser known play-to-earn gaming token Axie Infinity (AXS) and Loopring (LRC) — the DeFi coin and partner in GameStop’s soon-to-be revealed NFT marketplace — all are up at least 30% since last week.
On the other hand, open interest in the BTC options market has reached its highest level in 2022 according to data provider Coinglass. $3.4 billion in the contracts is set to expire Friday, with two thirds of the amount coming from long positions on the derivatives exchange Deribit.
In the letter, Fink highlighted the utility of digital currencies for cross-border payments, which experts in and outside of the crypto sector have also identified.
“A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption,” wrote Fink. “Digital currencies can also help bring down costs of cross-border payments, for example when expatriate workers send earnings back to their families.”
Citing the US Federal Reserve’s exploration for issuing a central bank digital currency, Fink’s comments are somewhat an about-face from his statements last summer on CNBC when the chief exec said bitcoin and other cryptocurrencies were “not part of the focus for retirement and long- term investors. We see very little in terms of investor demand on those types of things.”
A report from Coindesk last month, citing sources close to BlackRock, revealed that the $10 trillion asset management may soon offer cryptocurrency trading services to clients through its Alladin platform. Fink’s letter confirms BlackRock’s interest in the space.
“As we see increasing interest from our clients,” Fink wrote, “BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients.”
David Hollerith covers cryptocurrency for Yahoo Finance. follow him @dshollers.
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