No Impact on Bitcoin ETFs
The recent falsified BlackRock XRP trust filing, which caused a brief spike in XRP price before being exposed as a hoax, is unlikely to have any impact on the United States Securities and Exchange Commission's (SEC) decision regarding spot Bitcoin exchange-traded funds (ETFs). Bloomberg ETF analyst Eric Balchunas believes that the incident will not affect the SEC's final decision on Bitcoin ETFs. However, it does raise concerns about market manipulation, which the SEC has previously cited as a reason for rejecting Bitcoin ETFs.
A Bad Look for the SEC
While the fake XRP filing is not expected to delay ETF applications, it does reflect negatively on the SEC. The incident validates the SEC's concerns about fraud and manipulation in the cryptocurrency market, which it has used as grounds for rejecting previous Bitcoin ETF proposals. The filing, which caused a temporary surge in XRP price, was later revealed to be a hoax perpetrated by someone posing as BlackRock's managing director.
Challenges for ETF Applicants
Events like the falsified XRP trust filing make it more difficult for ETF applicants, such as BlackRock, to convince the SEC that they can protect investors from market manipulation and fraud in the cryptocurrency market. The opaque nature of crypto markets makes it challenging to demonstrate sufficient safeguards for investors. The onus is on ETF applicants to address these concerns and provide evidence of their ability to protect clients.
No Impact on SEC's View
James Edwards, a crypto analyst at Australian fintech firm Finder, argues that the fake XRP filing will not detract from the SEC's view that investors need protection from fraudulent and manipulative acts and practices. The incident highlights the need for stronger market manipulation controls in the cryptocurrency industry.
The fake XRP trust filing will be further investigated by the Delaware Department of Justice. BlackRock has filed for both a spot Ether ETF and a spot Bitcoin ETF, with both applications currently awaiting regulatory approval.
