Will BlackRock’s Scams and FUD Hurt Its Bitcoin ETF?

The Securities and Exchange Commission (SEC) has approved BlackRock’s proposal for a Bitcoin ETF for evaluation, taking us one step closer to the launch of the first spot Bitcoin exchange-traded fund (ETF) in the United States. However, the world’s largest asset manager may have challenges in gaining acceptability for the offering. The impediments stem from recent scandals and the associated reputational damage.

On June 15, BlackRock, the world’s largest asset manager with more than $9.4 trillion in assets, filed for its first Bitcoin ETF. The product has piqued the interest of the financial and cryptocurrency sectors. A Bitcoin ETF allows investors to obtain exposure to the cryptocurrency without physically holding it.

Clearly, this is a positive move for institutional investing and a benefit for BlackRock.

The SEC is currently reviewing BlackRock Spot Bitcoin ETF Application

The Securities and Exchange Commission (SEC) was keeping a close check on BlackRock as recently as January. A potential conflict of interest has been identified by the regulators.

Randy Robertson was disciplined by the agency on January 5, 2023. Previously worked as a portfolio manager at BlackRock Advisors, LLC. He reportedly neglected to disclose a conflict of interest stemming from his involvement with a film distribution firm in which the fund he supervised invested millions.

The research revealed that BlackRock Multi-Sector Income Trust (BIT), a publicly listed fund, had made loans of up to $75 million to subsidiaries of Aviron Group, LLC, which sponsored movie advertisements.

Robertson agreed to the SEC’s conclusions without acknowledging or rejecting them. He agreed to pay a $250,000 penalty. The former BlackRock employee also agreed to a cease-and-desist order and formal reprimand.

Furthermore, Blackrock’s melding of social and economic policies does not sit well with key leaders in the Republican Party. Ron DeSantis, the Republican firebrand governor of Florida, has slammed BlackRock.

Big fund managers have come under fire from the GOP’s 2024 presidential nominee for giving social and environmental (ESG) goals first priority. And for giving up the conventional objectives of boosting investment returns.

Both local and federal Republican lawmakers have added their voices to the cacophony. DeSantis removed $2 billion worth of Florida assets from « woke » BlackRock in December 2022.

We Are Democratizing Crypto Investment, Claims CEO

The biggest asset manager in the world is accustomed to controversy. In what Reuters described as the largest fraud probe in Germany since the Second World War, prosecutors raided the company’s premises in Munich in 2018.

Rumor has it that BlackRock defrauded the government by taking use of the « cum-ex » tax deduction. Financial institutions allegedly took part in a scam in which they exchanged dividend-paying stock. It is claimed that company personnel timed the trades to let many institutions file tax refund claims.

Each refund was supposed to be subject to a single party’s claim under tax legislation.

One of the financial industry’s heavyweights, BlackRock, has started adopting cryptocurrencies, but especially Bitcoin, in the midst of the upheaval. After BlackRock submitted its original application for a Bitcoin ETF, other companies, such as Invesco, Wisdom Tree, Bitwise, and Fidelity, did the same.

BlackRock CEO Larry Fink said on July 14 on CNBC’s Squawk on the Street:

“We believe we have a responsibility to democratize investing. We’ve done a great job, and the role of ETFs in the world is transforming investing. And we’re only at the beginning of that”.

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