Bitcoin (BTC) advocates have highlighted a clause in Valkyrie’s spot Bitcoin exchange-traded fund (ETF) application that could allow the US government to seize the underlying BTC.
The clause allows a US federal or state regulator to liquidate, seize, impound, or otherwise restrict access to BTC, which could be concerning, given how politically connected Bitcoin ETF issuers like BlackRock are. Valkyrie is one of thirteen companies applying to launch a spot Bitcoin ETF in the US. If its application is approved, the company will issue shares backed by BTC held at custodians.
How the US Could Kill a Bitcoin ETF
While new laws in the US and some non-US jurisdictions have rules to keep crypto assets safe, assets in some regions are still prone to seizure. Recent US seizures involve wallets used in criminal cases, but nothing stops governments from extending seizure mandates indiscriminately.
Read more: How To Set Up a Crypto Wallet
Bitcoin commentator VandelayBTC said the Gold Reserve Act of 1934 exemplifies the government’s discretion. The US government seized citizens’ gold in 1933 to prevent hoarding during the Great Depression. A new order signed into law in 1974 once again permitted private citizens to hold gold.
Other instances of seizure included the Trading With the Enemy Act of 1917, which restricted exchanging goods and services with enemies during wartime. Former US President Woodrow Wilson signed an executive order to confiscate assets from people deemed threats to the war effort. Bitcoin supporter Max Keiser agrees that the history of government scrutiny similarly endangers the BTC in ETFs.
“You are not protected against
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