c. 1300, "coarse white woolen stuff," also "a large oblong piece of woolen cloth used for warmth as a bed-covering" (also as a cover for horses), from Old French blanchet "light wool or flannel cloth; an article made of this material," diminutive of blanc "white" (see blank (adj.)), which had a secondary sense of "a white cloth."
As an adjective, "providing for a number of contingencies," 1886 (blanket-clause in a contract). Wet blanket (1830) is from the notion of a person who throws a damper on social situations in the way a wet blanket smothers a fire. In U.S. history, a blanket Indian (1859) was one using the traditional garment instead of wearing Western dress.
Only 26,000 blanket Indians are left in the United States. [Atlantic Monthly, March 1906]
c. 1600, "to cover with or as with a blanket;" also "to toss in a blanket" (as punishment), from blanket (n.). Related: Blanketed; blanketing.