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- Blackrock reduces reputational risk and pressures SEC
Blackrock reduces reputational risk and pressures SEC
The world's largest asset manager enters crypto! đź’Ą
Friends and associates,
BlackRock's application for a spot Bitcoin ETF has sparked a sharp bitcoin price increase from $25K above $30K as investor’s assess the probability of improved institutional access in the US. Perhaps the world’s largest asset manager is able to shift the SEC’s notably negative stance under Gary Gensler. Either way, BlackRock’s decision lowers the reputational risk of other institutions making a foray into crypto. While Larry Fink and co. are engaging with the tech, Genler’s SEC has taken off the gloves, charging the world’s largest exchanges. We expect Congressional backlash heading into the 2024 Presidential elections as the ramifications of Gensler’s crusade become obvious. TLDR: Bitcoin shrugs off external attack as BlackRock confirms institutional adoption trend
CONCLUSIONS
First US-based spot bitcoin ETF would improve trad-fi access
BlackRock’S application does not imply SEC success
Eventually the SEC will have to approve a spot ETF
BlackRock’s stance reduces the reputational risk for crypto allocation
We continue to expect higher prices in H2 2023
Caution against excessive euphoria
Sound Money Capital is an actively managed fund for HNWs & family offices. Fund specific commentary and factsheet available on request
Gary Gensler’s SEC has thrown off the gloves but bare-knuckle boxing with crypto is not going particularly well. Trading activity is outside the US and stablecoin volumes are shifting to tether, defeating the goals of the US government - which raises the prospects of Congressional action. The SEC case introduces FTX fears at Binance, but offshore investors do not seem to care, for now. The Coinbase allegations could bring some much-needed clarity regarding securities regulation, but this could take time to emerge.
CONCLUSIONS
SEC’s Binance case raises FTX fears but existing investors appear unperturbed
Coinbase case may create clarity on the application of securities law in crypto
Both cases will probably take many years to conclude
SEC’s actions are pushing activity outside the US, towards less regulated entities
Congressional backlash increases with each anti-crypto SEC case
Fragility in the banking system and the Fed's insistence on loosening highlighted a key value proposition of bitcoin and the crypto ecosystem. I discussed this and many other topics with Ciaran Ryan on the MoneyWeb Crypto podcast recently
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KBO, friends (Keep Buggering On - A favourite saying of Winston Churchill)
Rob Price, CFA
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