BlackRock, the world’s largest asset manager actively involved in the Bitcoin exchange-traded fund (ETF) race, raised concerns about the potential classification of Bitcoin as a security by the U.S. Securities and Exchange Commission (SEC).
In an update to its ETF filing, BlackRock highlighted the challenge of trading, clearing, and custodial services for digital assets if labeled as securities. They emphasized the likelihood of limitations or even impossibility for such assets to utilize the same channels as non-security digital assets.
Additionally, BlackRock warned that any enforcement action from the SEC or state securities regulators asserting Bitcoin as a security would immediately impact its trading value and the associated spot bitcoin ETF shares.
Referencing the SEC lawsuit against Ripple, BlackRock underscored the significant drop in XRP’s market capitalization following the regulatory action. Before the lawsuit, XRP’s market cap reached over $100 billion, but it drastically fell to under $10 billion post the SEC complaint, as noted by the asset manager.
This recent concern aligns with earlier speculations suggesting the SEC might classify Bitcoin as a security amid ongoing discussions about ETF approval, with expectations of potential approval as early as January 2024.
BlackRock’s concerns echo sentiments expressed by Ripple executives, who cited adverse impacts on their business due to the regulatory action, leading to lost partnerships and a decline in XRP’s value. Interestingly, Bitcoin and Ethereum appear exempt from being classified as securities, unlike other cryptocurrencies targeted by the SEC.
Despite this exclusion, dissatisfaction lingers, especially as the SEC continues scrutiny on various crypto networks. Charles Hoskinson, Cardano’s founder, joined the chorus of dissatisfaction, expressing frustration about the SEC’s treatment of Bitcoin and Ethereum.