Bitcoin’s trading value and ETF shares would be affected if it were classified as a security, according to BlackRock.
After the U.S. Securities and Exchange Commission (SEC) classified Bitcoin as a security, BlackRock—the biggest asset management firm in the world and a frontrunner in the race to launch an exchange-traded fund (ETF) investing in Bitcoin on the spot market—issued a warning about the potential repercussions.
In an update to its ETF filing, the firm acknowledged this concern, stating, “Should a digital asset be deemed or claimed to be a security, its trading, clearing, or custody in the United States via the same channels as non-security digital assets may become exceedingly difficult or impossible.”
In addition, BlackRock warned that the value of the digital asset would drop in the event of an enforcement action. “The trading value of bitcoin and the shares of the spot bitcoin ETF would likely be significantly impacted negatively if the SEC or any state securities regulator were to take enforcement action or a court ruling were to declare that bitcoin is a security.”
Noting the impact on XRP’s trading value, BlackRock pointed to the SEC complaint against Ripple. The business made a comment before the case that XRP’s market valuation may go beyond $100 billion on occasion. The asset manager lamented that XRP’s market valuation dropped below $10 billion in the weeks after the SEC’s lawsuit.
This new information comes after previous rumors that the Wall Street regulator is considering Bitcoin’s classification as a security, which has shifted the focus back to discussions about an ETF. Crucially, those in the cryptocurrency sector are hoping for the regulator’s green light as soon as January 2024.
At the same time, BlackRock and Ripple executives have expressed their displeasure with the action and its potential effects on their company. The blockchain firm claims it was unable to get collaborations both domestically and abroad. While this was happening, the price of XRP fell and has since not recovered. It would seem that just two cryptocurrencies—Ethereum and Bitcoin—have so far avoided being labeled as securities.
Nonetheless, the SEC’s targeting of other crypto networks suggests that this exception has not been overlooked. Charles Hoskinson, inventor of Cardano, is the most recent crypto CEO to express his displeasure with the way the SEC has handled Bitcoin and Ethereum.
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