BlackRock’s Filing Highlights Bitcoin ETF Risks, Signals U.S. Trading Channel Impacts

B. Ali
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BlackRock, the world’s largest asset manager, recently warned about potential issues with a Bitcoin exchange-traded fund (ETF). They expressed concern that U.S. authorities, like the SEC or state regulators, might classify Bitcoin as a security. If that happens, it could create problems for trading, clearing, and custody of Bitcoin in the U.S., using the same methods as other non-security digital assets.

In simpler terms, BlackRock is highlighting the possibility of regulatory challenges for Bitcoin if it’s treated as a security, impacting its ease of trade and storage through standard channels in the United States.

BlackRock Concerns: Bitcoin ETF Faces Risks with Security Classification

BlackRock, the world’s biggest asset manager, is worried about Bitcoin being labeled a security in its latest application for a Bitcoin ETF. Filed with the SEC, the update explains that if the SEC or state regulators declare Bitcoin a security, it could seriously hurt its trading value and the ETF shares. The filing suggests that classifying Bitcoin as a security would make it tough or even impossible to trade, clear, or store in the U.S. through regular channels, impacting its value and liquidity.

BlackRock Cites SEC’s Ripple Case as Caution in Bitcoin ETF Filing

BlackRock highlighted the SEC’s action against Ripple in its Bitcoin ETF filing. It pointed out that before the SEC lawsuit, Ripple’s XRP had a market value over $100 billion, but it dropped to under $10 billion afterward. This serves as a cautionary example. Commenting on BlackRock’s concern about Bitcoin, litigator Joe Carlasare noted the SEC’s interest in this language.

He explained it’s a recent addition by BlackRock, not present in earlier versions, signaling a disclosed risk for ETF investors. In simpler terms, BlackRock is drawing attention to the SEC’s impact on Ripple as a potential risk for Bitcoin ETF investors.

Therefore, BlackRock’s warning about the potential SEC classification of Bitcoin as a security, citing Ripple’s XRP case, adds uncertainty. Investors may become cautious amid fears of regulatory impact on Bitcoin’s market dynamics.

Former SEC Official Stark Aligns with Carlasare’s Concerns on Bitcoin ETF Approval

John Reed Stark, a former SEC official, agrees with Joe Carlasare that the SEC likely wants the warning in BlackRock’s filing. He questions why the SEC would include it if they planned to reject the ETF. While Stark is uncertain about the SEC approving a Bitcoin ETF, he values Carlasare’s analysis. Stark doubts SEC Chair Gensler’s support for a Bitcoin ETF, considering Gensler’s stance on crypto tokens.

In simpler terms, Stark thinks Carlasare has a point and doubts Gensler would approve a Bitcoin ETF given his views on crypto tokens.

 

 

About B. Ali PRO INVESTOR

Live webinar speaker and derivatives (Forex, Crypto, and Indices) analyst with a broad range of skills for evaluating financial data, investment trends, technical analysis, fundamental analysis, and the best ways to strategies investment selection.  Expertise: Trading Psychology; Speculative Positioning & Market Sentiment; Technical & Fundamental Analysis.