The Integration of Blockchain and TradFi: Insights from BlackRock Executives on the Future of Digital Assets

The financial market is at a critical turning point. In a deep conversation, Samara Cohen, head of BlackRock ETF and index investments managing $6.6 trillion in assets, shared her unique insights on digital asset ETFs, the modernization process of the market, and the integration of blockchain technology with TradFi.

Cohen describes herself as a "market modernization advocate," dedicated to enhancing market resilience, increasing transparency, and expanding investor participation. She believes that ETFs themselves are a disruptive technology, aligned with the goals of Blockchain technology: to drive market modernization and achieve innovation and transformation in financial markets. Technological innovation has always been the cornerstone of market modernization, a principle that has not changed for thousands of years.

Currently, we are in the stage of integration between blockchain assets and the traditional financial market. The one-year anniversary of the launch of the Bitcoin ETP in the United States marks an important watershed moment, and it's only the beginning. These ETPs have built a bridge between the crypto world and the traditional financial world, having a positive impact on participants in both fields. Traditional investors can access Bitcoin through familiar investment tools, while digital native investors have found that ETPs can meet their needs.

Cohen uses the transition from dial-up to broadband internet as a metaphor for the current development of digital assets. There are two perspectives on future developments: the current stage is akin to "dial-up internet", where Bitcoin ETFs are a "simulation version" of digital assets; the future vision is like the "broadband era", where the business of traditional financial institutions may shift to Blockchain. However, she raises a key question: is the fully decentralized vision truly the best fit for the current market and investors?

The development of the options market has brought new trading mechanisms to cryptocurrency ETFs. By introducing volatility tools into exchanges and listed trading, the market has achieved standardization of funding methods, measurability of volatility trends, and real-time monitoring of trading conditions. The options market provides investors with an additional way to participate in the market, allowing them to adjust their risk exposure according to their own needs.

For institutions like BlackRock that primarily target long-term investors, communicating fundamental factors to investors is more important than focusing on Bitcoin price trends. Their criteria for measuring the success of an ETP are: whether the product meets investor demand, whether it provides an effective market access mechanism, whether it has good liquidity, and whether it can achieve effective price discovery.

Cohen pointed out that many people believe that Ethereum ETFs are not as successful as Bitcoin ETFs, but from the professional standards of the ETF industry, the launch of Ethereum ETFs is actually quite successful. The primary criterion for judging whether an ETF is successful is whether it can achieve its expected goals, including tracking accuracy and market quality.

Regarding future development, BlackRock hopes to see further research on Bitcoin in portfolio construction, with the discussion shifting from "whether to invest in Bitcoin" to "how to reasonably incorporate Bitcoin into the portfolio." The launch of Bitcoin ETP options is also an important development that helps create a more balanced trading dynamic.

BlackRock's current digital asset strategy focuses on the operation and development of Bitcoin and Ethereum ETFs, tokenization projects (, especially the tokenization of treasury funds ), and stablecoin-related businesses. The company adopts a relatively cautious and pragmatic approach, with new product development continuing to be customer-driven.

For the new government about to take office, BlackRock is closely monitoring its impact on the cryptocurrency industry. They are looking forward to a more innovation-friendly regulatory environment while also emphasizing that appropriate regulation is crucial for maintaining investor confidence.

Looking ahead to 2025, BlackRock focuses on three core aspects: the establishment of fundamental definitions, clear delineation of jurisdiction, and the establishment of public-private collaboration mechanisms. They believe the industry is entering a potential "golden age," primarily due to lower costs of Block space, a more convenient development environment, and clearer regulatory prospects.