Explore the growth of cryptocurrencies and their impact on financial institutions. Learn about the US SEC’s approach to cryptocurrency ETFs and the potential influence of BlackRock, the world’s largest asset manager.
The crypto business needed to get a haircut, switch off the rock n’ roll, and grow up after FTX’s massive crash last year, which is to say, start functioning under some real laws, even if Washington hasn’t quite figured them out. Perhaps BlackRock was the essential parent cryptocurrency.
The Rise of Cryptocurrencies and BlackRock’s Potential Influence on SEC
Since Bitcoin’s 2009 launch, tens of thousands of cryptocurrencies that serve as digital wallets on decentralized networks and are not overseen by governments have emerged, threatening existing financial institutions. When legacy banks and celebrity sponsorships made the business more respectable, others made a fortune. In 2021, Bitcoin cost over $60,000. Without industry regulation, cryptocurrency was always risky (Bitcoin’s value has dropped by 50% in the last two years).
The SEC has only allowed cryptocurrency ETFs based on bitcoin delivery contracts. Chicago Mercantile Exchange controls these. It hasn’t approved spot ETFs, which would let investors buy and sell bitcoins like stocks. Since a decade ago, the SEC has rejected petitions like these, citing a high danger of fraud and manipulation and the fact that most crypto-trading tokens are unregulated securities. A new competitor appears to have succeeded in the highly regulated banking industry.
BlackRock is the biggest asset manager in the world with a $8.6 trillion portfolio. It is sometimes called the fourth arm of US government and has close relationships to international leaders. Due of its power, prestige, and financial support, BlackRock may influence the SEC where others have failed.
BlackRock’s iShares Bitcoin Trust has a “surveillance-sharing agreement” to get Nasdaq approval. It’s a muddy phrase for a trade transparency initiative. BlackRock has 575 SEC approvals and one rejection, according to Bloomberg analyst Eric Balchunas. If successful, Fidelity, WisdomTree, and Invesco may get spot ETF clearance.
According to CoinRoutes CEO Dave Weisberger, “The BlackRock ETF is likely to be approved.”
Back from the Dead: FTX, the aforementioned cryptocurrency exchange that suffered massive losses over a short period of time due to founder Sam Bankman-Fried’s poor leadership and maybe illegal conduct, may make a zombie-like comeback. The Wall Street Journal reported that CEO John J. Ray III stated the company “has begun the process of soliciting interested parties to the reboot of the FTX.com exchange.” Ray previously told the WSJ that FTX’s business model and goods were well-liked by clients and investors despite the alleged deception. We can only hope that it won’t target our minds this time around after first going after our cash.