BlackRock, a prominent New York-based investment company, along with index provider MSCI, are facing scrutiny over its involvement with Chinese entities under U.S. sanctions, potentially threatening its crypto ETF initiative.
US Committee Probes BlackRock and MSCI
A United States congressional committee is scrutinizing BlackRock and MSCI for purportedly assisting financial investments into a handful of Chinese companies blacklisted by the U.S. These companies have allegedly been involved in funding military developments and human rights violations in China. The House of Representatives Select Committee on the Chinese Communist Party expressed their concerns in letters issued recently. Subsequently, BlackRock’s shares fell by 0.89%.
BlackRock Responds to Investigation
In response to these accusations, BlackRock stated, “In all our investments in China and around the globe, BlackRock abides by all relevant U.S. laws. We will maintain direct engagement with the Select Committee regarding the issues raised.” Despite their statement, uncertainty looms over the company’s recent initiative in the crypto ETF space, considering the ongoing investigation by the Securities and Exchange Commission (SEC).
In June, BlackRock, along with a number of U.S. banks, began significant acquisitions of digital assets. This move is unusual as banks traditionally exhibit caution towards such assets. However, they purchased an unprecedented amount of cryptocurrency. Consequently, rumors began to circulate that BlackRock, having bought over $200 million in Bitcoin and other digital currencies, was planning to launch a crypto ETF.
BlackRock’s Crypto ETF Bet
Around the same time, BlackRock’s recruiter Serge Varlay was covertly filmed by OMG News’ undercover journalist, alleging that the company influences politicians. This information came to light as BlackRock formally applied for a spot in the Bitcoin exchange-traded fund, and digital asset marketplace EDX Markets started operations. Meanwhile, the two biggest cryptocurrency exchanges, Binance and Coinbase, were under investigation by the SEC. Now, the ongoing SEC investigation into BlackRock brings uncertainty to the future of their crypto ETF initiative.