BlackRock raises voice against stablecoins


Giant fund manager BlackRock raised questions against the stability of stablecoins and claimed that it will impact the performance of crypto ETF significantly.

BlackRock is a top-level fund manager firm which doesn’t need any type of introduction to the financial world. Currently, this fund manager is in queue to get approval for its Bitcoin spot ETF application from the United States Securities and Exchange Commission (SEC), to provide a way for people to invest in Bitcoin in unlimited amounts.

Recently this fund manager reportedly passed negative statements against stablecoins e.g. USDC (Circle), USDT (Tether), etc. 

According to this fund manager, the history of these stablecoins is proof of how these stablecoins can impact the prices of crypto assets. 

In short, BlackRock believes that instability in the pegged price of the stablecoins may impact the actual trade value of Bitcoin & also to Bitcoin spot ETF products.

Currently, USDC & USDT are two top stablecoins which are highly adopted among crypto Investors as a decentralised tool to move funds from one crypto platform to another easily.

In Feb & Oct of 2021, USDT stablecoin faced high sell pressure & also the pegged value plunged slightly, following several fake reports over the company’s reserves & links with Chinese companies debt pressure.

In March of this year, USDC stablecoin depegged from its $1 pegged value, when people came to know that USDC issuer Circle was holding a fraction of reserves on the bankrupt bank Silicon Valley.

By considering all these incidents, BlackRock noted that the relationship of these stablecoins with cryptocurrencies directly & indirectly poses huge risks & challenges. 

Furthermore stated that it will also create a complicated situation for BlackRock to fight against the challenges associated with the Stablecoins & Crypto assets relationship because it will create operational difficulties, possible manipulative practices, and regulatory challenges.

Now it will be interesting to see what response will come from the stablecoin firms, as stablecoins are playing a vital role in helping the crypto investors to do trading activities under a decentralised environment without any need for banks.

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