Why Asset Manager BlackRock Considers USDT a Risk for Its Bitcoin Spot ETF
BlackRock Says USDT Poses Risk for the Bitcoin Market
BlackRock’s Bitcoin spot ETF (Exchange-Traded Fund) filing has made headlines this week after some crypto enthusiasts accused the asset manager of spreading “Tether (USDT) FUD.” Among them is X user @Bitfinexed, who noted that the risk disclosure section in BlackRock’s ETF filing featured previous allegations, like money laundering, leveled against USDT, which the firm fears would affect the Bitcoin market.
In the ETF application, BlackRock said that even though it won’t invest in stablecoins, it could still be exposed to the many risks that such digital currencies pose for the BTC market since this market largely relies on USDT. The asset manager argued that in the event the stablecoin depeg or experiences a bank run, it could cause significant market volatility in the Bitcoin market.
USDT is the third-biggest crypto asset, only behind Bitcoin and Ethereum. It has a market capitalization of $86.89 billion. The stablecoin is the most-traded cryptocurrency. Traders use it to enter and exit the crypto market quickly without the involvement of traditional banks.
USDT plays an important role, especially in areas where dollars are unavailable or restricted, like in the decentralized finance space, which aims to revolutionize the traditional finance sector.
USDT’s Controversies
But USDT has found itself in the middle of controversies over the past few years. For instance, its issuer, Tether, has failed to provide documentation proving that USD back the stablecoin. Moreover, there are reports that the company is not audited by external parties as the law requires.
Two years ago, the New York Attorney General ordered Tether to cease doing business in the city after the authority found out that the stablecoin issuer had given false information about USDT reserves. BlackRock disclosed these concerns in its ETF filing, saying Bitcoin will take a massive hit if USDT collapses.
“Risk Disclosure is a Standard Process,” VanEck’s Gabor Gurbacs Says
Meanwhile, strategy advisor at VanEck, Gabor Gurbacs, says there isn’t much to read into BlackRock’s risk disclosure regarding USDT. He argues that listing risks is a standard process for ETF issuers.
VanEck and BlackRock are among the 12 companies that filed for a Bitcoin spot ETF in July. While the US Securities and Exchange Commission has not approved any ETF, analysts believe it is only a matter of time.
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