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BlackRock Warns of Stablecoins’ Risk to Bitcoin

BlackRock identifies stablecoins as a risk to Bitcoin:

  • BlackRock highlights the risks that stablecoins could pose to Bitcoin and, consequently, to Bitcoin ETFs.
  • BlackRock identifies its indirect exposure to stablecoins as a “risk factor.”
  • The impact of stablecoins on the stability and price of Bitcoin is becoming a major concern for investors and regulators, according to BlackRock.

BlackRock’s Alert on Stablecoins

The world’s largest asset manager, BlackRock, recently discussed the potential risks that stablecoins represent for Bitcoin.

In its recent filing for a Bitcoin ETF, which has just been made public, BlackRock emphasized that its indirect exposure to stablecoins was a “risk factor.” The assets mentioned in the document include Tether’s USDT and Circle’s USDC.

Although the [iShares Bitcoin Trust] does not invest in stablecoins, it can still be exposed to the risks that stablecoins pose to the Bitcoin market and other digital asset markets.”

BlackRock stated in its document.

This revelation sparked many discussions within the crypto community on Twitter as it comes from a leading financial institution.

Volatility and Impact on Bitcoin

BlackRock highlighted the volatile nature of stablecoins, pointing out that their market value can fluctuate significantly. Moreover, this volatility has already had an impact on the price of Bitcoin in the past.

The company also raised concerns about certain practices surrounding stablecoins, such as the potentially improper issuance of Tether, which could “create artificial demand” for Bitcoin, thus influencing its price unnaturally.

Consequences for the Future of Bitcoin

This warning from BlackRock about stablecoins comes in the context of extreme price volatility of digital assets, including Bitcoin.

The company cautioned that future fluctuations could have a significant impact on the value of Bitcoin-related shares.

To date, BlackRock is awaiting approval for 2 Spot ETFs, namely the iShares Bitcoin Trust and the iShares Ethereum Trust. Many experts believe that the SEC will announce its decision before January 15th, 2024.

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