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BlackRock CEO Larry Fink's shift in perspective regarding bitcoin (BTC) may facilitate the acceptance of cryptocurrencies among other Wall Street executives. However, several experts caution that his preference for exchange-traded funds (ETFs), which are fundamentally distinct from the core principles of digital assets, could lead the industry astray.

The main difference lies in the fact that an ETF is essentially a conventional investment vehicle, with bitcoin as the underlying asset, but it is traded on a regulated stock exchange through regulated brokers. These structures may contradict the principles of Bitcoin, which was created and launched in 2009 by an anonymous creator as a response to the excessive practices on Wall Street that led to the worldwide financial crisis in the previous year. Bitcoin was envisioned as an internet-based, peer-to-peer payment network that would operate independently of government control.

The response from cryptocurrency enthusiasts may be varied, despite Fink's newfound affection potentially contributing to the recent surge in bitcoin's price, which has increased by 82% so far this year.

“Crypto is losing the plot,” said Jim Bianco, president of Bianco Research. “It is supposed to be about decentralization, permissionless and self-sovereignty. Getting excited that it is going to become a more accessible poker chip is nice and will help degens in the short term, but it will not help to fulfill the real promise of crypto.”

Fink, previously known as a crypto skeptic and even labeling bitcoin as "an index of money laundering" at one point, stated on Wednesday that it has the potential to "revolutionize finance."

 

 
Instead of commending the fundamental concept of decentralization in the recently established digital asset market, Fink emphasized that BlackRock's primary objective was to enhance the convenience and affordability of trading and investing in bitcoin. This stance raised concerns among industry experts, who questioned BlackRock's motivations behind its involvement in the market.
 
“Arguments have been made that ETFs, as well as bitcoin exchanges, ignore what some believe is the single most important feature of bitcoin, the ability to control their funds without the need to place trust in a third-party to manage the asset,” said Jim Iourio, managing director of TJM Institutional Services and a veteran futures and options trader. “This flies in the face of Bitcoin’s entire point of existence.”
 
Cryptocurrency was founded on the principle that money should not be controlled by intermediaries like banks or governments, allowing it to remain impervious to any form of manipulation.
In the case of ETFs, the provider (such as BlackRock, if it receives regulatory approval to introduce the product) possesses the underlying asset and offers fund shares to investors, operating in a manner that contradicts the original purpose behind cryptocurrencies.
 
“So-called mainstream adoption will bring waves of new entrants to bitcoin, and the risk is that they won’t care, and won’t protect the decentralization properties that make it valuable over centralized alternatives in the first place,” Alex Thorn, head of research at the digital-asset financial firm Galaxy, wrote this week in a report.
 
Mainstream adoption

However, it can't be entirely negative, at least for the time being, when the head of the largest asset management company worldwide openly acknowledges that his perspective on bitcoin has changed from a few years ago and now considers it as "digitalizing gold."

The endorsement from individuals such as Fink could facilitate widespread acceptance, further establishing bitcoin in everyday usage and the collective awareness of the general public.

Paul McCaffery, the managing director of boutique investment firm Keefe Bruyette & Woods (KBW), expressed his belief that Fink's acceptance of Bitcoin could potentially open doors for other Wall Street investors to feel at ease with the cryptocurrency and increase their investments in it.

“It’s a game-changer," he said. "His commentary was not about this being a good economic decision for BlackRock but rather about the promise of digital wealth.”