You don’t understand BlackRock

I’m just beyond exhausted at reading stuff like ‘BlackRock is secretly buying Bitcoin’ or ‘just wait until BlackRock starts buying’

BlackRock is a CUSTODIAL BROKER. This means that they hold on to the investments of their clients:

1) THEY DO NOT CHOOSE THEIR OWN INVESTMENTS

2) THEY DO NOT HAVE THEIR OWN MONEY TO INVEST

Don’t believe me? Literally look at their own 10K, or the Google Finance version of their balance sheet at FYE:

(SEC version)

https://www.sec.gov/Archives/edgar/data/1364742/000119312512085869/d270105d10k.htm

(Virtual breakdown)

https://www.google.com/finance/quote/BLK:NYSE?hl=en

At the end of PFYE, BlackRock had $7.4B in cash and short term investments, total assets of $117B (mainly their office buildings and office equipment) and $78.8B in liabilities. But where’s that magic $10 Trillion that they have and are about to dump into Bitcoin, I hear you ask? Well that’s their client money. Every time Mom and Pop have a spare $1,000 that they want to earn a higher return than a normal bank deposit they buy a BlackRock ETF. That $1,000 still belongs to Mom and Pop, it’s not suddenly BlackRock’s money. Can BlackRock sell Mom and Pop’s Apple stock and use the money to buy Bitcoin? No. Can BlackRock sell their Client’s $10 Trillion of bonds and stocks to buy Bitcoin? No.

Can BlackRock use some of their current $7B cash to buy Bitcoin? Theoretically yes, as long as they leave enough cash to meet their current liabilities. However, if they started buying Bitcoin they would have to file more forms with the SEC to let shareholders know that the contents of their balance sheet has materially changed (more specifically an ‘8-Q’ form, which you can check for here: https://www.sec.gov/edgar/browse/?CIK=0001364742). They would also have to notify shareholders in their 10K forms as well as explain to shareholders the reason for the change. So no, BlackRock, as of now, hasn’t bought any Bitcoin, and the most they can theoretically spend on Bitcoin is between $4B-$6B. NOT $10 Trillion of clients money.

But what about the eventual Bitcoin ETF? I think a BlackRock ETF will be a good thing, however, an ETF’s initial ’seeding’ funding is often borrowed from investment banks, NOT from the broker (ie BlackRock). These initial shares will then be sold on to investors and the original ‘seeding’ company will no longer hold a position. Therefore, at no Point will BlackRock own Bitcoin. They may HOLD bitcoin on behalf of their clients, they may even buy Bitcoin on behalf of clients, but they will never buy Bitcoin to hold for themselves.

I hope that this clears things up as, right now, we are a complete laughing stock with comments like ‘BLACKROCK IS BUYING BITCOIN AND YOU SHOULD TOO’ or ‘BLACKROCK IS ABOUT TO DUMP ITS 10 TRILLION FUNDS INTO BITCOIN’