Did BlackRock flip the crypto script?

Exchanges

It wasn’t that long ago (earlier this month) that the US appeared to be on a path of outright hostility towards the crypto industry, seemingly bent on taking out crypto-native ventures even as several other regions around the world opened their doors to crypto integration.

This has sometimes been seen as a combative stance led by the SEC and aggressive enough for some crypto industry participants, including some influential figures, to speculate that it is an orchestrated attempt to halt cryptocurrency development. In fact, this theory even has a name: Operation Choke Point 2.0 (a reference to a 2013 to 2017 banking investigation by the U.S. Department of Justice that was heavily criticized for allegedly evading due process.)

There are also, it should be noted, many observers who reject this theory. Moreover, it is true that proponents of the idea that there is an anti-crypto campaign behind the scenes tend to overlook the very real irregularities highlighted on some major crypto platforms, which, as in the case of an entity like FTX, sometimes have caused huge damage to users.

But whichever side of that debate you fall on, what becomes clear is that this month has seen a massive shift in the US crypto landscape, leading to a dramatic turn in sentiment.

A gloomy start to the month

June got off to an ominous start, with the SEC suing both Binance and Coinbase (ranked as the first and third largest crypto exchanges in the world by average daily volumes, respectively) and giving the outward impression of a regulator on the warpath and hunting on cryptocurrency.

Perhaps at least in part due to these events, bitcoin’s price fell below $25,000 after an impressively bullish year to date. In addition, general sentiment took a dent as it began to appear that even while other regions of the world were seriously looking at ways to integrate crypto, the US, if the SEC’s stance was indicative of a broader plan, is willing was to cut itself off from the entire industry.

BlackRock changes the situation

Against this background, BlackRock saw the whole situation turned upside down mid-month when the world’s largest asset manager applied to operate a Bitcoin spot ETF. While the SEC has approved Bitcoin futures ETFs in the past, 28 applications for spot ETFs (from entities other than BlackRock) have been rejected.

One can’t help but be impressed by BlackRock’s timing, with the application running counter to the growing impression of a regulatory environment at war with crypto, and raising questions that spill over into politics. BlackRock CEO Larry Fink, who is seen as a supporter of the Democratic Party, used his considerable clout to send a message not only to the SEC, but even to the Democratic administration itself, indicating that Bitcoin, and maybe crypto in a broader sense, not a sector the US should pull out of or push offshore?

Regardless, observers noted that of the 576 ETF applications ever made by BlackRock, all but one had been accepted and the markets certainly received a message, regardless of behind-the-scenes intentions, with bitcoin now moving above the $30,000 trades.

The price of Bitcoin in June.

Other companies follow

The newly brisk sentiment was bolstered by a series of further Bitcoin spot ETF filings from other companies, with Fidelity, Invesco, Wisdom Tree, and Valkyrie all following BlackRock’s lead. Additionally, the second half of June saw the launch of EDX Markets, a crypto exchange backed by financial industry giants including Citadel, Fidelity, and Charles Schwab.

That has been a story around Bitcoin for several years now the settings are coming, and now very suddenly, and at an unexpected moment, this part of the script seemed to play out at a fast pace. There was also another curious development recently, when the SEC first approved a leveraged Bitcoin futures ETF. an incoming SEC shift.

Nuance from the Fed

A more nuanced approach to crypto in the US, compared to the SEC’s stance, was on display when Federal Reserve Chairman Jerome Powell stated last week, while testifying before the House Financial Services Committee, that: crypto appears to have staying power as an asset class,” and he also explained that “we see payment-stable coins as money.”

Furthermore, regarding stablecoin issuance, Powell claimed that:

“We believe it would be appropriate to play a pretty robust federal role in what happens to stablecoins going forward, and giving us a weak role and allowing a lot of private money creation at the state level would be a mistake.”

The crypto industry has proven to be a volatile arena over the past decade, and it’s always been the case that the prevailing mood can change quickly, but the effect of BlackRock’s most recent ETF application is particularly striking, suggesting the possibility of a consequential long-term adjustment in US institutional attitudes toward crypto.

It wasn’t that long ago (earlier this month) that the US appeared to be on a path of outright hostility towards the crypto industry, seemingly bent on taking out crypto-native ventures even as several other regions around the world opened their doors to crypto integration.

This has sometimes been seen as a combative stance led by the SEC and aggressive enough for some crypto industry participants, including some influential figures, to speculate that it is an orchestrated attempt to halt cryptocurrency development. In fact, this theory even has a name: Operation Choke Point 2.0 (a reference to a 2013 to 2017 banking investigation by the U.S. Department of Justice that was heavily criticized for allegedly evading due process.)

There are also, it should be noted, many observers who reject this theory. Moreover, it is true that proponents of the idea that there is an anti-crypto campaign behind the scenes tend to overlook the very real irregularities highlighted on some major crypto platforms, which, as in the case of an entity like FTX, sometimes have caused huge damage to users.

But whichever side of that debate you fall on, what becomes clear is that this month has seen a massive shift in the US crypto landscape, leading to a dramatic turn in sentiment.

A gloomy start to the month

June got off to an ominous start, with the SEC suing both Binance and Coinbase (ranked as the first and third largest crypto exchanges in the world by average daily volumes, respectively) and giving the outward impression of a regulator on the warpath and hunting on cryptocurrency.

Perhaps at least in part due to these events, bitcoin’s price fell below $25,000 after an impressively bullish year to date. In addition, general sentiment took a dent as it began to appear that even while other regions of the world were seriously looking at ways to integrate crypto, the US, if the SEC’s stance was indicative of a broader plan, is willing was to cut itself off from the entire industry.

BlackRock changes the situation

Against this background, BlackRock saw the whole situation turned upside down mid-month when the world’s largest asset manager applied to operate a Bitcoin spot ETF. While the SEC has approved Bitcoin futures ETFs in the past, 28 applications for spot ETFs (from entities other than BlackRock) have been rejected.

One can’t help but be impressed by BlackRock’s timing, with the application running counter to the growing impression of a regulatory environment at war with crypto, and raising questions that spill over into politics. BlackRock CEO Larry Fink, who is seen as a supporter of the Democratic Party, used his considerable clout to send a message not only to the SEC, but even to the Democratic administration itself, indicating that Bitcoin, and maybe crypto in a broader sense, not a sector the US should pull out of or push offshore?

Regardless, observers noted that of the 576 ETF applications ever made by BlackRock, all but one have been accepted and the markets have certainly received a message, regardless of behind-the-scenes intentions, with bitcoin now moving above the $30,000 trades.

The price of Bitcoin in June.

Other companies follow

The newly brisk sentiment was bolstered by a series of further Bitcoin spot ETF filings from other companies, with Fidelity, Invesco, Wisdom Tree, and Valkyrie all following BlackRock’s lead. Additionally, the second half of June saw the launch of EDX Markets, a crypto exchange backed by financial industry giants including Citadel, Fidelity, and Charles Schwab.

That has been a story around Bitcoin for several years now the settings are coming, and now very suddenly, and at an unexpected moment, this part of the script seemed to play out at a fast pace. There was another curious development recently, when the SEC first approved a leveraged ETF for Bitcoin futures. an incoming SEC shift.

Nuance from the Fed

A more nuanced approach to crypto in the US, compared to the SEC’s stance, was seen when Federal Reserve Chairman Jerome Powell stated last week, while testifying before the House Financial Services Committee, that: crypto seems to have staying power as an asset class,” and he also explained that: “we see payment-stable coins as money. “

Furthermore, regarding stablecoin issuance, Powell claimed that:

“We believe it would be appropriate to play a pretty robust federal role in what happens to stablecoins going forward, and giving us a weak role and allowing a lot of private money creation at the state level would be a mistake .”

The crypto industry has proven to be a volatile arena over the last decade, and it has always been the case that the prevailing mood can change quickly, but the effect of BlackRock’s most recent ETF application is particularly striking, suggesting the possibility of a ensuing long-term adjustment in US institutional attitudes toward crypto.


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