Will BlackRock's Controversial Reputation Prevent Spot Bitcoin ETF Approval?
Date: 2023-07-18 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
The Securities and Exchange Commission (SEC) has accepted BlackRock's application to create a spot bitcoin ETF, thereby bringing the launch of the instrument in the United States closer. However, on the way to adopting a new product, the company may face potential obstacles that are associated with recent scandals and the accompanying reputational consequences.
On June 15, investment giant BlackRock applied to create America's first spot bitcoin ETF. The approval of this tool will be a crucial event for institutional players and will allow investors to gain access to BTC without directly owning the cryptocurrency.
BlackRock's application is being reviewed by the Securities and Exchange Commission
At the beginning of the year, BlackRock was under the scrutiny of the SEC. On January 5, the Commission took action against Randy Robertson, a former portfolio manager of BlackRock Advisors, LLC.
The investigation revealed that BlackRock's publicly traded Multi-Sector Income Trust (BIT) provided loans of up to $75 million to subsidiaries of Aviron Group, LLC, which financed film advertising.
Robertson agreed with the SEC's findings, neither acknowledging nor denying them, as well as the cease-and-desist order and formal censure.
In addition, the mixing of social and fiscal policies of BlackRock does not suit influential figures of the Republican Party. The world's largest asset manager has been repeatedly attacked by Florida's conservative governor, Ron DeSantis.
The 2024 presidential candidate criticized fund managers for prioritizing ESG and sacrificing traditional profit maximization goals for investors. In December 2022, DeSantis withdrew $2 billion of state-owned assets from BlackRock.
Larry Fink believes he is democratizing investment in cryptocurrencies
BlackRock and its CEO, Larry Fink, have been repeatedly spotted for controversial actions. In 2018, prosecutors raided the company's Munich offices as part of an investigation that Reuters called "the largest fraud investigation in Germany since World War II."
According to reports, BlackRock exploited a tax loophole while stealing from the state. Financial institutions used a scheme in which they exchanged dividend-paying shares among themselves. Representatives of the companies allegedly selected the time for transactions in such a way that several institutions could demand a tax refund.
According to tax law, each refund had to be claimed by only one party.
Against the backdrop of all these upheavals, BlackRock became one of the first titans of the financial world to start investing in cryptocurrency - in particular, in bitcoin. After the company submitted its initial application to create a spot ETF, its actions were repeated by other major players, including Invesco, Wisdom Tree, Bitwise and Fidelity.
"We believe that we have a responsibility to democratize investing. We have already done a lot of work, but so far we are only at the beginning of this journey," Larry Fink, CEO of BlackRock, said in an interview on CNBC's Squawk on the Street program on July 14.
