coindesk.com
BlackRock's (BLK) digital asset business shrank sharply over the past year even as investors continued to pour money into its crypto products, highlighting the impact of lower crypto prices on the world's largest asset manager.
The firm reported digital asset products falling to $48.8 billion at the end of the second quarter from $79.6 billion a year earlier, a decline of nearly 39%, in its latest earnings release on Wednesday.
The drop came despite $15.1 billion of net inflows into the products over the past 12 months. Those inflows were more than offset by $45.8 billion in market depreciation, according to BlackRock’s filing underscoring how closely the firm's crypto ETF business remains tied to digital asset prices.
The weakness continued in the second quarter, when BlackRock's digital asset products recorded $3.1 billion in net outflows.
The decline in BlackRock's digital asset funds came during a weaker quarter for crypto markets. Bitcoin BTC$64,642.65 and ether ($ETH) both struggled to reverse losses from earlier in the year, with the largest crypto asset falling more than 14% in the quarter while ether fell 25% over the same period.
The figures contrast with BlackRock's broader business, which posted record assets under management (AUM) of $15.3 trillion after attracting $192 billion in net inflows during the quarter. The company also beat Wall Street expectations with adjusted earnings per share of $13.91 on $7.08 billion in revenue.
BLK shares traded 4.15% higher at £1,068 in pre-market trading Wednesday.
BlackRock’s crypto target
BlackRock is targeting $500 million in annual revenue from the business under its 2030 plan, the firm said in its earnings call.
This would represent an increase of more than tenfold, compared to the $40 million BlackRock currently generates in base fees and securities lending, accounting for less than 1% of the firm's total fee revenue.
BlackRock has steadily expanded its crypto ETF lineup since listing its spot bitcoin ETF (IBIT) and spot ether ETF (ETHA), in 2024. More recently, the firm introduced the iShares Bitcoin Income ETF (BITY), which seeks to generate income by writing covered call options on bitcoin exposure, offering investors an alternative to simply tracking the cryptocurrency's price.
The asset manager also manages $60 billion of Circle’s reserves, about one-quarter of the $300 billion stablecoin market, and wants to become the industry’s reserve manager of choice, it added.
BlackRock pointed to 5 billion crypto wallets as a new distribution channel for its traditional investment products during the earnings call.