The SEC’s previous rejections of a Bitcoin spot ETF raise concern over BlackRock filing
BlackRock’s filing for a Bitcoin spot ETF was no surprise to those paying attention. The US Securities and Exchange Commission (SEC) has rejected a series of exchange-traded funds (ETFs) seeking to offer Bitcoin to the mainstream.
Their extensive ETF filings in the previous years resulted in the approval of 99.8% of applications, with only one ETF being rejected. As the world’s largest asset manager, BlackRock’s influence has led to speculations about its relationship with the US government.
Previous Bitcoin spot ETFs have been rejected, citing manipulation in the underlying market as the primary reason. BlackRock has addressed this issue by partnering with NASDAQ to establish a surveillance sharing agreement.
By leveraging NASDAQ’s surveillance capabilities, BlackRock aims to monitor and address trading activity, clearing activity, and customer information, thus ensuring effective mitigation of potential market manipulation by the trust sponsor, BlackRock itself. This strategic move could be the key factor in securing the approval they seek, as no other ETF submission has included such provisions.
Custody of BlackRock’s Bitcoin
The SEC has alleged that Coinbase is operating as an unregistered broker. It has also claimed that all cryptocurrencies available on Coinbase, except for Bitcoin, are unregistered securities, adding to the situation’s complexity.
Coinbase, having received a warning from the SEC earlier this year, expressed frustration over the lack of clear guidance on complying with the registration requirements. Despite the agency’s approval of Coinbase’s business model two years ago, the company is now caught in a regulatory crossfire.
Coinbase’s CEO Brian Armstrong took to Twitter to voice his concerns, stating that the SEC’s regulatory approach is harming America and emphasising the need for clarity through legal channels.
The ongoing struggle to establish a clear regulatory framework has raised suspicions within the crypto community. Both Coinbase and Binance, another major exchange, claim to have repeatedly sought guidance and clarity from the SEC but have yet to receive a satisfactory response. This uncertainty surrounding securities classification has created additional ramifications for exchanges and investors alike.
Protecting investors
While regulatory bodies often justify their actions as protective measures for investors, the repeated rejections of Bitcoin spot ETFs and the SEC’s handling of the situation have led some to question the underlying motives.
Some observers speculate that these actions could be part of a larger plan to centralise the banking system and pave the way for a Central Bank Digital Currency (CBDC). They argue that the industry is being systematically undermined by deliberately hindering exchanges and promoting large institutional control.
A potential consequence of this orchestrated attack on the crypto industry could be the absorption of exchanges by large institutions, such as BlackRock after they have been sufficiently crippled. Critics argue that this consolidation of power would remove the self-custody option for Bitcoin holders, undermining the core principle of “not your keys, not your coins”.
The SEC recently filed a complaint against Coinbase, alleging that the exchange unlawfully facilitated the buying and selling of crypto asset securities, resulting in billions of dollars in revenue since 2019. This raises questions about why BlackRock, a prominent asset management firm, continues using Coinbase for custody despite the SEC’s allegations.
My conclusion
The SEC presents a facade of openness towards exchanges while imposing obstacles to compliance. Simultaneously, the Federal Reserve’s risky interest rate hikes contribute to a protracted banking system collapse, consolidating power with institutions like JP Morgan. Coinciding with these developments, the SEC initiates lawsuits against major exchanges, including Coinbase and Binance.
JPMorgan will likely acquire Coinbase, and BlackRock’s ETF will be approved. The landscape now reflects a situation in which the US government asserts its required control over the crypto sphere, facilitated by traditional banks operating as exchanges and the world’s largest asset manager offering Bitcoin custody.
Is it a power grab or a facade of investor protection? Will the UK aim to secure its piece of the Bitcoin pie? Geopolitical ramifications await as the situation unfolds.