‘Massive Calamity’—BlackRock And The U.S. Government Could Be About To ‘Kill’ Bitcoin Amid Huge Ethereum, XRP And Crypto Price Rally – Forbes


11/08 update below. This post was originally published on November 7
Bitcoin BTC has been turbo-charged in recent months by soaring expectations the world’s largest asset manager, BlackRock BLK , could be about to lead a Wall Street bull run (though some credit a shock Federal Reserve flip).
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The bitcoin price topped $35,000 per bitcoin last month for the first time since early 2022, pushing the ethereum price and XRP XRP price higher along with the wider crypto market as fears emerge of a potential bitcoin “rug pull.”
Now, legendary bitcoin and crypto trader Arthur Hayes has warned that bitcoin and crypto could be sleepwalking toward “massive calamity,” warning BlackRock and the U.S. government could be about to “kill” bitcoin.
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U.S. president Joe Biden isn’t a fan of bitcoin and crypto, with some suggesting asset managers like … [+] BlackRock are “agents of the state” and not good for bitcoin.
“If the BlackRock [bitcoin spot exchange-traded fund (ETF)] gets too big, it could actually kill bitcoin because it’s just a bunch of immovable bitcoin that’s just sitting there,” Hayes, who cofounded crypto derivatives pioneer BitMex, told Blockworks.
11/08 update: Despite extensive pushback from the crypto space, the Biden administration has used reports that Hamas’s October 7 attack on Israel was partly funded by crypto as justification for a crypto crackdown, calling for new powers from Congress to aid in preventing the illicit use of crypto, according to a Wall Street Journal report.
Deputy Treasury secretary Wally Adeyemo, speaking during a meeting of the Securities Industry and Financial Markets Association trade group, said the Hamas attack has brought an “increased focus on the illicit financial use” of crypto. “There are places where we think Congress needs to act,” Adeyemo said. “We’re going to work with Congress to get more tools.”
Adeyemo said more action is needed from both Washington and the cryptocurrency industry itself. “What I’m going to continue to say to the industry is that you have the ability in lots of ways to self-regulate and to make sure that you’re protecting yourselves from being in a position where people are using your assets to further their either heinous acts, like what Hamas did, or digital criminals,” Adeyemo said, praising last months crackdown on so-called crypto mixers that are designed to mask the origin and destination of funds.
The comments are likely to further entrench fears among the crypto industry that the U.S. government is waging a secret war on crypto, branded Operation Choke Point 2.0.
In June, BlackRock kicked off a Wall Street race to get a long-awaited U.S. bitcoin spot ETF to market following years of Securities and Exchange Commission (SEC) rejections.
Expectations that a bitcoin spot ETF in the U.S. could be imminent soared over the summer, further boosted by crypto asset manager Grayscale winning a significant legal victory in its bid to convert its flagship bitcoin trust into a fully-fledged bitcoin spot ETF.
Grayscale, owned by the sprawling Digital Currency Group empire, is the largest known owner of bitcoin, with almost 650,000 bitcoin—four times that of Micahel Saylor’s MicroStrategy MSTR , the software company that has been buying huge amounts of bitcoin since 2020.
The SEC has said it’s still considering whether to wave through a flurry of bitcoin spot ETF applications, though the market is betting one could become available to traders and Wall Street within the next few months.
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The bitcoin price has rocketed this year on expectations that BlackRock and Wall Street could be … [+] about to pile into the crypto market, boosting ethereum, XRP and other major cryptocurrencies.
“Let’s say [BlackRock chief executive] Larry Fink and his [traditional finance] ilk come in and hoover up a large percentage of the freely traded bitcoin in circulation,” Hayes said, arguing bitcoin spot ETFs that require institutions to buy up huge volumes of bitcoin could give them control of bitcoin’s consensus mechanics.
“BlackRock is the largest shareholder of some of the largest [bitcoin] mining operations,” Hayes said, warning the same Wall Street giants that want to create bitcoin spot ETFs could launch bitcoin mining ETFs as well.
“Are we, you know, gaining a sugar high today only to engender a massive calamity in the future? I don’t know.”
Wall Street asset managers like BlackRock are “agents of the state,” according to Hayes, who thinks “they act on what the state tells them to do”—feeding fears the U.S. is waging a secret war on bitcoin and crypto that’s become known as Operation Choke Point 2.0.
This year, the traditional financial service sector has pulled back from the crypto industry and market, with a flurry of bank failures earlier this year linked by some to their crypto services who fear the banking crisis was partly directed by the U.S. government and regulators.
The original 2013 Operation Choke Point was a U.S. Department of Justice initiative to discourage banks from working with firearm dealers, payday lenders, and other companies believed to be at a high risk for fraud and money laundering.
In September, Binance CEO Changpeng “CZ” Zhao issued a “frank” Operation Chokepoint 2.0 warning.


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