BlackRock taps Kraken's CF Benchmarks to power its bitcoin offering: Exclusive

Quick Take

  • Kraken subsidiary CF Benchmarks will work with the world’s biggest asset manager on its bitcoin offering.
  • BlackRock launched its own Bitcoin private trust in August after announcing a partnership with Coinbase.

BlackRock will use Kraken's CF Benchmarks bitcoin index pricing product for its first crypto offering. 

The world’s largest asset manager's bitcoin product will be benchmarked by CF Benchmark's indexes, the latter company's CEO Sui Chung told The Block. Last month, BlackRock announced a deal with Coinbase to offer institutional investors access to crypto, and subsequently said it launched a private trust offering exposure to spot bitcoin to U.S.-based institutional clients.  

BlackRock did not immediately reply to a request for comment regarding the CF Benchmarks news.

CF Benchmarks is trying to be the MSCI index of the crypto world as interest and demand continue to grow despite the plunge in crypto asset prices. Several other players are creating crypto indexes, including the industry leader, S&P Dow Jones Indices, which created new cryptocurrency indexes last year

CF Benchmarks is a member of the Crypto Facilities group of companies, a member of the Payward group of companies. Payward is the owner and operator of crypto exchange Kraken Exchange, one of the oldest such platforms.

About five years ago, when CF Benchmarks first launched, it had a single product and one client: the bitcoin reference rate and the Chicago Mercantile Exchange (CME), respectively. The London-based firm now covers clients around the globe, including Hashdex in Brazil and Wisdomtree in Europe.  

Chung noted a the increasing interest institutions have demonstrated over the past couple of months, compared to even six months ago.

“The understanding of digital assets themselves is much greater than it was, people we talk to now understand the difference between bitcoin and ether,” Chung said. People no longer lump bitcoin and ether into the same bucket and are more aware of the fundamentals of the assets.  

The agreement with BlackRock has been in the works since 2021, Chung said.

They wouldn't launch a product unless there was demand, Chung said. Firms like BlackRock don’t do this sort of thing as a “kite flying exercise, because let's face it, it's not a decision that carries no risk.” 

This isn’t BlackRock’s first exposure to bitcoin. The firm's Global Allocation fund revealed in early 2021 that it had gained some exposure to bitcoin, through the CME’s bitcoin futures offering, per a filing – these trades are cash-settled and use CF Benchmarks reference rates. 

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