Bitcoin (BTC) advocates have highlighted a clause in Valkyrie’s spot Bitcoin exchange-traded fund (ETF) application that could allow the US government to seize the underlying BTC.
The clause allows a US federal or state regulator to liquidate, seize, impound, or otherwise restrict access to BTC, which could be concerning, given how politically connected Bitcoin ETF issuers like BlackRock are. Valkyrie is one of thirteen companies applying to launch a spot Bitcoin ETF in the US. If its application is approved, the company will issue shares backed by BTC held at custodians.
How the US Could Kill a Bitcoin ETF
While new laws in the US and some non-US jurisdictions have rules to keep crypto assets safe, assets in some regions are still prone to seizure. Recent US seizures involve wallets used in criminal cases, but nothing stops governments from extending seizure mandates indiscriminately.
Read more: How To Set Up a Crypto Wallet
Bitcoin commentator VandelayBTC said the Gold Reserve Act of 1934 exemplifies the government’s discretion. The US government seized citizens’ gold in 1933 to prevent hoarding during the Great Depression. A new order signed into law in 1974 once again permitted private citizens to hold gold.
Other instances of seizure included the Trading With the Enemy Act of 1917, which restricted exchanging goods and services with enemies during wartime. Former US President Woodrow Wilson signed an executive order to confiscate assets from people deemed threats to the war effort. Bitcoin supporter Max Keiser agrees that the history of government scrutiny similarly endangers the BTC in ETFs.
“You are not protected against government seizure and the US government plans to seize all BTC ETF Bitcoin in the interest of national security.”
How the US Could Kill a Bitcoin ETF
The connection between some ETF applicants and the government could also be a concern. BlackRock applied to launch its ETF in June. Many believed the application meant a change in the mood in Washington toward crypto.
However, a 2019 report by the Campaign for Accountability showed that BlackRock and its CEO Larry Fink pushed to relax aspects of the Dodd-Frank Act after the 2008 crisis. The report alleges it did this for its own benefit, emerging from the crisis as the world’s largest asset manager. Fink allegedly gained significant political connections after the 2008 crisis.
Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach
As a result, a BlackRock Bitcoin ETF could be more bullish for BlackRock than Bitcoin. There is a risk that BlackRock could pursue crypto policies that benefit its own business rather than the crypto industry at large.
Do you have something to say about how a Bitcoin ETF could put power in the hands of Washington or anything else? Please write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or X (Twitter).
Disclaimer
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
Be the first to comment