BlackRock bitcoin ETF | The wolf enters the henhouse?
2023-06-21

Institutional scale bitcoin investment in America, the dream of many early digital gold asset backers, is becoming a distinct possibility. 

But for some, an institutional move into bitcoin is nothing more than a dystopian nightmare, where a noble battle against the corruption of the fiat monetary system ends with the rich, once again, getting richer.

The application for an ETF by the largest asset manager in the world, BlackRock, could not have happened at a stranger time in cryptocurrency’s regulatory history. 

Just as the SEC is hunting down Coinbase for allegedly flouting securities laws, BlackRock is requesting the SEC’s approval for a spot bitcoin ETF — with Coinbase as its custodial partner.

It should be no surprise that BlackRock would choose to work with Coinbase for its ETF, as they have long been strategic partners. Still, the entry of old-world wealth into the bitcoin realm is raising red flags in the community. While the notion of large-scale, heavily regulated investment entering bitcoin appears on the surface to be highly bullish for the industry, not everyone is enthused. Concerns about some sort of hostile takeover are swirling in the community.

The founder of Morgan Creek Capital Management says Xapo, the institutional-scale crypto custody tool that Coinbase acquired in 2019, could come into regulatory play.
“What if,” he asks, BlackRock can “take over this storage unit?” BlackRock would then hold a significant portion of crypto assets in America, he says. “And if they have the bulk of it,” regulators could then shut down the Coinbase exchange as an SEC-alleged “unlicensed casino” and hand the Xapo unit over to BlackRock.

Host Ippolito adds that the response from the Bitcoin community has been “pretty roundly negative” regarding the ETF application.“In the filing, there’s a little paragraph about what BlackRock would do in the event of a hard fork,” Ippolito says. “BlackRock is going to have to make a decision.”

“In the event of a hard fork,” Ippolito explains, “there will be two different copies of Bitcoin.” As has happened in previous forks, one of the two will be selected as the canonical chain. 
“And BlackRock’s gonna have to make a decision about that.”

Fears swirl around the possibilities of BlackRock closing off access to what some would perceive as the preferred fork, but Ippolito is concerned with “the Bitcoin community’s pushback.”

“It makes me think that they don’t really understand social consensus,” he says. “If you want Bitcoin to keep going up and be widely adopted you need larger and larger buyers.”

Yusko responds to the community’s backlash against undesirable money entering the scene, “You want any and all fiat of any kind in any variety to convert to bitcoin because the bigger the network, the bigger the safety, security, the more adoption.” 

“That’s the only way the value of a network goes up.”

Investment management company Invesco (IVZ), which has $1.5 trillion assets under management, reapplied for a spot bitcoin exchange-traded fund in conjunction with Galaxy Digital.

The move comes after TradFi giant BlackRock filed for an spot ETF last week, which shook up the market. Another peer, WisdomTree, also refiled for an spot ETF on Tuesday, after getting rejected by the SEC in 2022.Invesco first filed for a bitcoin ETF in In 2021 - also with Galaxy. It also filed for a bitcoin futures ETF, but dropped the effort in October 2021 after a futures ETF by ProShares was approved and began trading first.

In its filing, Invesco argued that the lack of a spot bitcoin ETF pushes investors towards riskier alternatives, as seen in insolvencies like FTX, Celsius Network, BlockFi, and Voyager Digital Holdings.

Invesco also emphasized the need for investor protection, saying that approval for such a spot bitcoin ETF hinges on a surveillance sharing agreement with a significant, regulated market, not on the regulation of the spot bitcoin market itself.

Surveillance-sharing agreements facilitate the exchange of information concerning market trading activity, clearing processes, and customer identification, which would significantly reduce the potential for market manipulation – something the Securities and Exchange Commission is very concerned about.

BlackRock (BLK), in its filing, advocated for the same thing, argued that Nasdaq could be brought in to fill this role.

“The SEC is very concerned with market manipulation related to Bitcoin prices, and has cited this in almost, if not all, previous rejections,” Graeme Moore, Head of Tokenization, at the Polymesh Association, said earlier to CoinDesk. “This is because the SEC’s view is that Coinbase and others are not regulated as exchanges and therefore cannot be trusted to ‘prevent fraudulent and manipulative acts and practices’.”

So far, the SEC hasn’t given any indication as to when it plans to make an announcement regarding a bitcoin ETF.

long story short big boys watching BTC and the Game is ON

who is ready for 40K btc ?