BlackRock’s Bitcoin ETF and Tether FUD
BlackRock, the world’s biggest fund manager, recently sparked discussions in the crypto community due to its Bitcoin exchange-traded fund (ETF) application and its mention of “Tether FUD.” Despite the filing being from June, it has garnered attention for including warnings about how Tether—and the stablecoin market in general—could impact BlackRock’s Bitcoin ambitions. Critics have labeled this as spreading fear, uncertainty, and doubt.
First things first: BlackRock, with over $9 trillion in assets under management, filed for a spot Bitcoin ETF in June. The application and comments from CEO Larry Fink have led many to believe that Bitcoin is on the verge of massive institutional adoption. Although the U.S. Securities and Exchange Commission hasn’t approved a Bitcoin ETF yet, experts believe it’s only a matter of time.
The “Tether FUD”
Every ETF application must disclose risks. BlackRock’s filing expressed concerns about stablecoins like Tether posing risks for the bitcoin market and other digital asset markets. The filing highlighted that if Tether were to experience a disorderly de-pegging or run, it could lead to dramatic market volatility in digital assets more broadly.
Tether Controversy
Tether mints USDT, the third-largest cryptocurrency after Bitcoin and Ethereum, with a market cap of $87 billion. It is used to enter and exit trades quickly without using traditional banks or fiat currency. However, it has been controversial due to its lack of documentation proving that U.S. dollars back USDT and its lack of independent audits.
In 2021, Tether agreed to no longer do business in New York after an investigation found it had made false statements about the backing of its stablecoin. BlackRock had to disclose this as concerns around the impact of a stablecoin collapse like Tether could have on Bitcoin and the crypto market are not overblown.
Hot Take
While critics continue to raise concerns about Tether potentially harming Bitcoin, BlackRock was simply following standard practice by mentioning potential risks associated with stablecoins in their ETF application.
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