Global investment management company BlackRock says it envisions a more pervasive role for cryptocurrencies in the future, and that blockchain has promise but it is not without obstacles.
The positive, yet cautious remarks were part of the firm's Global Weekly Commentary published on Monday by global chief investment strategist Richard Turnill.
"We see cryptocurrencies potentially becoming more widely used in the future as the market matures," the commentary reads. "Yet for now we believe they should only be considered by those who can stomach potentially complete losses. Similarly, blockchain needs to overcome significant hurdles to reach its promising future."
Though cryptocurrencies have promise, they remain too volatile, unregulated and risky to be integrated into mainstream investment portfolios right now, Turnhill wrote, explaining:
"The volatility of the cryptocurrencies makes the gyrations in the U.S. equity market during the global financial crisis almost look placid."
Likewise, the commentary acknowledged blockchain's "disruptive potential" for industries "from logistics and pharmaceuticals to financial service," but said its adoption would not be seamless and must involve regulators and central bankers.
"Take the financial industry," Turnill explained, noting that "a blockchain-based, single shared financial database could eliminate inefficiencies and risks associated with human processes, but adoption at scale would require a massive shift in software development and a well-constructed maintenance model."
This is not the first time BlackRock or Turnill have chimed in on the crypto conversation.
Turnill previously called cryptocurrency markets "scary" and a bubble, and argued that there is no way to assess a "fair value" for bitcoin or any other coins.
BlackRock CEO Larry Fink struck a different tone last fall, however, and endorsed the potential of cryptocurrencies, calling himself "a big believer" in their prospects.
BlackRock's commentary suggests it is unlikely to move on cryptocurrency soon, and it has already previously dismissed the idea of a bitcoin exchange-traded fund. Nonetheless, its future actions remain to be seen. "The market is evolving," Turnill said.
Blackrock headquarters image via Shutterstock