BlackRock rejects advisory role in face of bitcoin backlash

BlackRock, the world’s largest asset manager, has agreed to give up its advisory role with a Chinese cryptocurrency trading platform as it appeared to “go woke” just as the company is increasingly investing in Chinese opportunities.

White Mountains Insurance Group, a South Jersey company with $3.8 billion in assets under management, fired BlackRock in November when BlackRock refused to end the advisory role.

“They raised the alarm against White Mountains, saying we were getting back into gambling,” Stephen Zussino, the chief executive of White Mountains, told The Wall Street Journal.

BlackRock has also scrapped advisory roles in other Asian countries, including the Philippines and Singapore. In the Philippines, BlackRock withdrew in December after the National Bureau of Investigation raided its offices in Manila to investigate whether the company was operating a Ponzi scheme.

The development comes amid growing pressure in the United States over whether to halt financial firms from investing in Chinese companies.

In a memo, Daniel Tarullo, a Federal Reserve governor, argued that financial firms should be barred from investing in companies in high-tech sectors like artificial intelligence and internet-of-things devices.

Most American banks and hedge funds have since complied with such a policy, but BlackRock is the latest company to defy such pressure from the Trump administration.

As The Guardian reported, Chinese investors were left to speculate that BlackRock had made political decisions rather than financial ones.

“Don’t have a conversation with me at BlackRock, and don’t transact with us. We will encourage our clients to avoid you,” one billionaire told the Guardian.

The British pound plunged nearly 2 percent in value after the Daily Telegraph reported that China was deploying a “Cold War” policy to monitor and probe the assets of financial firms.

“They are freezing the dollar out of the party and at a high level and in big numbers and this has put a strain on the financial system,” Brian Hughes, the managing director of Talon Asset Management, a hedge fund, told the Telegraph.

China’s Ministry of Commerce responded that their government was only trying to prevent huge gains. “We will spare no efforts to prevent any attempt to undermine financial stability,” Chinese commerce spokesman, Gao Feng, told reporters.

The United States and other Western nations were appalled by China’s attack on bitcoin. San Francisco Mayor London Breed, who has vowed to become “the bitcoin capital of the world,” visited the town and unveiled a historic structure that will become the largest city-owned bitcoin exchange in the world.

Breed has embraced blockchain — a set of tech that can verify transactions — to finance public goods. The city of San Francisco already controls blocks of real estate that have hundreds of millions of dollars’ worth of bitcoins stashed away.

“We will never allow great innovation to be stifled,” Breed said at the unveiling.

“The principles of Blockchain will make our city more effective, efficient and collaborative and enable us to compete more successfully in the future,” she said.

Read more at The Guardian


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