Thursday, May 23, 2024
Blackrock, the world’s largest asset manager, has expressed concern in its latest spot bitcoin exchange-traded fund (ETF) filing update about the possibility of bitcoin being classified as a security by the U.S. Securities and Exchange Commission (SEC), state regulators, or court rulings. The company cautioned that if bitcoin is deemed a security, it could become difficult or impossible to trade, clear or custody the digital asset in the United States through the same channels used by non‑security digital assets.

The filing discusses the potential impact of bitcoin being classified as a security, citing examples such as the SEC’s enforcement action against Ripple and the significant impact it had on XRP’s market capitalization.

Commenting on Blackrock’s warning, commercial litigator Joe Carlasare noted that the SEC wants this language in the filing, emphasizing that it has been adopted by Blackrock as a potential disclosed risk for ETF investors. Former SEC internet enforcement chief John Reed Stark also weighed in, expressing skepticism about the likelihood of an SEC approval for a bitcoin spot ETF.

It remains to be seen how the SEC will approach the issue of classifying bitcoin as a security, especially given Chair Gensler’s views on crypto tokens.

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